October 22, 2008

Breakfast Roll Man is in need of a second chance

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Breakfast Roll Man In TroubleToday, Breakfast Roll Man is looking at his ghost estate. Not one sold. The three auctioneers don’t return his calls. Nothing is working

A bewildered Breakfast Roll Man can’t quite believe his eyes. It’s like watching Paul McShane at right full for Ireland; he’s got to pinch himself and ask how it happened. How did the banks pull the rug from under his development in Kells? Two years ago when he paid (admittedly, a fair whack) for the site, they told him they would stand behind him. He remembered that little twerp from the bank’s head office with the shiny suit and buckets of gel in his ‘fin’ haircut.

In ‘fin boy’ strolled to give Breakfast Roll Man the spiel about how the demographics of the country were excellent and how the Irish fundamentals were sound. He laughed as he described County Meath as Ireland’s ‘baby belt’, where young children outnumber the elderly four to one. He chummily patted Breakfast Roll Man’s shoulder and forecast that ‘they’ would be able to sell the houses, no bother.

Even then Breakfast Roll Man was a bit worried about the spec. He’d explicitly chased the market upwards, sparing no expense, with ‘islands’ in the kitchen, expansive decking, hot tubs and second faux-marble bathrooms downstairs.

But the bank assured him that they’d finance the first time buyers — who apparently were getting ‘more demanding’.

There’d be no problem and we’d be out by Christmas 2007, they said. Even if there was a bit of ‘resistance’ as they called it, the bank would roll over interest payments, ‘kick’ out the maturity a few years and wait for the buyers to snap them up.

Sure anyway hadn’t everything worked for him before? He was sorted. Breakfast Roll Man had it all going on.

Today, he’s looking at his ghost estate. Not one sold. The three auctioneers — all of whom told him that they’d sell the houses off plans — don’t return his calls. Nothing is working, not even the idea of paying the first three years’ interest for first time buyers. Prices are dropping like a stone and there is still no floor.

As for the banks, they are squeezing every last penny out of him. Worse still, the personal guarantees — or ‘PGs’ as ‘fin boy’ called them — mean that everything he worked for since 2000 is tied to this field on the N3. His whole world is cross-collateralised.

Back in 2001, he took some politician’s advice and started to shop around. He started dealing with all the banks, thinking he was smart. But the bank’s insistence on personal guarantees meant that everything was now tied up, nothing was his. All his properties were weaved together in a web of debt and he — Breakfast Roll Man — was sitting squarely in the middle, facing bankruptcy.

How did this happen?

Had you told him in 2005 that he’d be facing ruin and his only parachute was to go back to the US to work on jobs in the freezing New York winter, undercutting Hispanic builders, he’d have told you where to go. Back then, during the last years of the Bertie Boom, Breakfast Roll Man was the subbies’ subby. He was employing Polish lads, driving a blacked-out Touareg, flipping apartments in Dunshaughlin and buying off plans in Bulgaria. The only way was up. He had a full Bose ‘surround sound’ home entertainment system, Katya, the exotic Czech ‘dancer’ in the master bedroom, a season ticket at Old Trafford in his back pocket and a direct line to bank credit whenever he wanted.

He’d never again work for anyone else. He was free and what’s more, he was the first one in his family to be free. He and his younger brother — a chippy — laughed when they remembered their Dad talking about loyalty. Well check out what loyalty did for him after thirty years at Dunlops in Cork!

Credit and his own hard work had liberated him from the snobby class of bankers, insurance men and doctors who ruled the Ireland of the 1980s. He felt vindicated driving past them in his 06 Jeep, bidding for their houses at auction and eyeing up their daughters at Lillies.

Breakfast Roll Man voted for Bertie. He only got the vote in 1994, just as Bertie was coming to prominence. He benefited from the tax cuts, the builder bias in every Budget and when he started ploughing surplus cash into tax-free car parks no one could argue with him that Bertie wasn’t the man. After all, even Katya — who didn’t say much, between the pouts — claimed that he looked like an honest man in the VIP ‘exclusive’ of ‘Bertie at Home’ that she kept beside the king-sized waterbed.

Bertie had a social contract with Breakfast Roll Man. The Taoiseach did everything he could to keep house prices rising and this gave hundreds of thousands the impression that they were getting rich.

This illusion acted like a prosperous conveyor belt, which we could jump on and in so doing avoid the heavy lifting of hard work. Bertie promised Breakfast Roll Man a get-rich-quick scam and in return Breakfast Roll Man gave Bertie his support and ignored the blatant deficiencies in our public services. All this carry-on on Joe Duffy about class sizes, waiting lists and trolleys on corridors passed him by. The only thing that got him texting was the bleedin’ toll bridge.

He even voted for Bertie last time because although house prices were beginning to wobble, he trusted Bertie to sort things out. As far as Breakfast Roll Man was concerned he voted for Bertie not Fianna Fail. But he realises now he was sold a pup. He doesn’t know what to make of Cowen.

Breakfast Roll Man was never ideological. He knows nothing about the civil war. Sean Lemass might as well have been Brian Boru as far as he is concerned. Wolfe Tone sounds like a children’s Halloween character and his Ma couldn’t stand De Valera. He is now a floating voter, with allegiance to no one.

Whoever wants to win the next election has to get inside Breakfast Roll Man’s head. He wants security, not risk; familiarity not novelty and above all he wants to be given a second chance. Like thousands of others, he deserves it. But who is going to throw him a lifeline? Can you afford to pay for his parachute?


  1. Are you not contradicting yourself? You said before that the housing market should not be artificially bouyed up, but allowed to hit it’s natural level. Here you are exhorting the twits to back BRM up? Let him fail, and his ilk.

  2. John H

    opportunity for nimble thinkers.

    Solve the school infrastructure problem with one feel swoop.
    Close of some of the hotels that got tax breaks and convert them into schools

    Or as the blog post below, let the schools turn to commercial spaces available in the down turn. I do know of one PLC section of a large community school are in rented accommodation in the local industrial park so it can be done.

    http://213.232.94.135/merlinjohnonline/news.php?item.395.3

    As I commented on a previous post, the English government are in the process of renovating all secondary schools over the next 10 years to provide spaces to learn in for the 21st Century.
    Maybe we should do the same.

  3. Script extract:

    Father Dougal

    “Ted, Ted. Wouldn’t it be mad if one building industry tycoon reinvested all the profits he earned in the building boom into the same bank that lent him all the funding for the boom years and then bet against all the short sellers who drove the bank into the ground because the bank lent the money without enough capital and both the bank and the tycoon lost it all?.
    Wouldn’t it Ted?”

    Father Ted

    “Would ya go on outta dat, Dougal, sure that’d never happen”

  4. Ger

    Is there a viable alternative to the western capitalist economic model? Surely it is not just a question of regulating the finanical institutions in this country- I pose this question sincerely, surely the inequities in this country are a result of decision making and the system our political and business elite adhere to?

    The 300,000 people who seek assistance from Saint Vincent De Paul annually, the 40,000 children in prefabricated buildings, the 280,000 unemployed, the millions in debt etc, surely this is not the way forward for us. Instead of aggressive competitiveness in the jobs market and executive boardroom – can humans work together for the greater good?

    I am sure there are nice business people who do charitable works etc…….it’s just the system they are apart of is driving us economically and environmentally into the ground?

    Any thoughts???

  5. seamus

    You have just described me! I sold a business in 2006 and invested (unwisely in retrospect) all my lifes earnings and am now stuck with a small housing development. I even had contracts and deposits on unfinished houses but the bank said contracts weren’t worth the paper they were written on and refused further funding. I have even tried to off load the houses below cost to no avail. With the development and my own personal guarantees I stand to loose everything. Renting is not even an option.

    Surely the current economic approach by the Irish government is incorrect. Basic business tennents dictate that a slash and burn approach shows a short termism mindset ineffective in the long run. I believe that Gordon Browns approach is correct in encouraging business, circulation of money and a positive attitude even if he has to borrow now and pay back later. It reduces dole numbers keeps employment going and reduces brain drain. Anyone with comments????

    • Garry

      Sorry to hear about your circumstances, Seamus… Ive no good news for you though, the bubbles burst, all the Brian’s and all the Marys wont put Humpty back together again.

      The government are borrowing billions this year anyways with home choice, which is an attempt to get people to start buying again… it mightn’t be any good to you as houses have to be covered by home bond which i think only the bigger builders do…… I regard these schemes as a criminal waste of my taxes; trying to pawn off banks and builders losses by finding the last few gullible people to take out mortgages at current prices. Maybe they could do more on refurbishing schools or homes but taxes are way down also, the budget was far from slash and burn, in my opinion the failure to do some slashing and burning will bite us later.

  6. Ger

    Is there a viable alternative to the Western Capitalist model of economic development? I pose this question sincerely. I think this boom and bust cycle has educated a lot of people however those in the political and business elite seem in denial.

    The 300,000 who seek support from Saint Vincent De Paul annually, the 280,000 unemployed, the 40,000 children in prefabricated buildings, the massive inequalities between rich and poor in this country would seem to indicate that there is something radically wrong.

    I am sure there are nice business people, who do charitable work, provide employment and genuinely believe they do no harm, however, there are major consequences to what has taken place in Ireland, just read some of the comments above.

    Instead of aggressive competition in the market place and the executive boardroom typified on the programme ‘The Apprentice’, where often the worse characteristics of people come to the fore, I ask do people from all sectors have the capacity to work together for the common good?

    The self-centered ‘get rich or die trying’ attitude over the last 10 years in Ireland has been a sad expression of our national chatacter.

    I believe the business model being pursued in Western countries is economically and environmentally driving us all into the ground, is there another way for us to prosper as a race?

  7. kieran daly

    Not a word on the budget!.Seeing as the govt will be borrowing 15% of GNP within 2 years, I think this is what needs to be debated and solved.The economy is a right mess , but anyone who saw the Lawson boom and bust knew it was coming.We are in an even bigger mess than the Brits were, @ least they left the ERM and growth resumed.How will spending be cut?.We are stuck once again with thousands of people we don’t need.Thanks to the Irish Times and the liberal ilk for that!.The highest paid teachers and the worst school buildings, the perfect trade off!.

  8. Bigby

    if Breakfast Roll Man gets his second chance does that not simply increase the moral hazard. To put it another way if he gets a bailout whats to stop him doubling-down and getting into even more debt? If we liken BRM to a debt-junkie surely its up to us to cut off his supply instead of further enabling his anti-social behaviour?

  9. Socket Twomey

    Is he driving a Jeep or a Touareg? You referred to two different cars in your piece.

    David, when you copy and paste material from David Brooks, it’s important to make some slight changes to the text so that the plagiarism isn’t so obvious.

  10. Philip

    I think David is saying everyone deserves a second chance. But reality is that that will not happen because no one can afford it.

    You know, I am a bit cheesed off at the lack of investigative journalism right now…I think this latest column and similar I see elsewhere suggests a malaise of constantly referring to generalities and drawing broad conclusions. It’s lacking meat. I’d like to see some investigative journalism into the Government and the Banks. David has done a fine job of laying the framework. Now, can we see some guys do a Veronica Guerin (who I regard was one of the real patriots of this country who understood what freedom of the people was all about) on what David has been alluding to. Specifics and answers are needed and it needs to be in the open. Has the media the guts to take this on?

    • Furrylugs

      RTE won’t ruffle the politicos. They need a huge hike in the TV license.

      Be a good time to moor the lot of us on here offshore and broadcast the unpalatable truth.

      Back to the 60′s anyone?

  11. Malcolm McClure

    David said: …..get inside Breakfast Roll Man’s head. He wants security, not risk; familiarity not novelty and above all he wants to be given a second chance. Like thousands of others, he deserves it. But who is going to throw him a lifeline? Can you afford to pay for his parachute?
    BRM’s misfortune was that he apparently never learned those simple lessons in assembling a property portfolio that are second nature to anyone who has played the board game Monopoly. Don’t build hotels on the Old Kent Road. Take a Chance and Advance to Mayfair.
    Perhaps if BRM (or Sean above who seems to be in a similar situation) were to sit down and analyse the components of the Irish property ‘boom and bust’, including his own contribution to it, he would be able to devise a board game that might become a best-seller over the holiday season. A kind of Snakes and Ladders where bankrupcy replaced the snakes and generous banks provided the ladders. The playing pieces would be the ubiquitous VW Toureg, the Outdoor Barbi, the Bouncy Castle and the Apple iPhone. The winner wold be the first player to bid farewell to the other suckers and retire to Portugal. The unlucky ones would forfeit two throws in Jail before they were given their ‘second chance’.

  12. Woodsey

    Phillip,

    Do you mean that we should have some investigative journalism into how greedy we were in thinking that we could go on borrowing to fund the sort of life-style to which David is alluding?

    EU interest rates were low, banks were under pressure from their shareholders and from each other in a competition to lend more and more. Developers could borrow cheap and build dear and we mugs bought on the back of the banks’ encouragement. 4-wheel drives, 45″ TV’s and holidays in the Maldives, for God’s sake! Government went along with it ’cause we were all ecstatic and ecstatic voters vote for the government in power and TD’s are only human and they need votes!

    We never had it so good. We loved it. We couldn’t get enough of it. Most number of helicopters per head of population in the world!

    Now we’re all going sliding down the razor-blade of payback time and casting around desperately for scapegoats. Oh, no, no it ain’t me babe, it ain’t me your lookin’ for, babe!

    Specifics and answers? The answer’s called ‘greed’ Stephen. It was us and it’s all around you. Look!

  13. Furrylugs

    I’ve a bit of sympathy for BRM. he was supplying a service for basic supply & demand economics.
    BRM should not be confused with PSM, Prawn Sandwich Man. He who had the corporate box at Old Trafford and access to all DMcW alludes to above. The invisible secretive feudal baron who manipulated BRM to line his pockets. BRM is now, as described, in serious do-do but PRM still maintains the box in OT, is even more secretive if not sinister and colludes with his financial/ political collegiates to exfoliate any culpability. “Twas the greedy BRM wot led us astray, M’lud”

    We elected a government in trust that has lied. We did business with Banks on trust that the social information from Government was true. We trusted every expert economic report, projection and assertion.

    Now this same homozygosity of elitists are throwing it all back at us.

    We were led up the garden path like fools.

  14. MK

    Hi David,

    This Breakfast Roll Man (BRM) you outline will get little sympathy from the public at large. He is not typical if he was developing his own housing estates and has now been left in debt and with a falling asset – ie: negative equity. He made hay while the sun shone (or seemed to shine) and now he is akin to your other categorisation – Paddy Last, but just at a bigger scale.

    Its true that bigger versions of BRM (ie: Suited Man who sometimes dons a Hardhat) had policies enacted by FF that supported them and their development business, such as the Taggarts. What is clear is that FF are still supporting them with their policies even though it is obvious to the blind dog on the street that the property economic mirage has failed. What I dont get is that all of this pro-property stance is not a long-term vote winner when things inevitably come crashing down, as it is doing. But it seems like FF actually believed and was a pusher in the ponzi scheme.

    > It’s like watching Paul McShane at right full for Ireland

    I think we should leave unfortunate McShane out of this. Whilst he had a great start to his intenational career, he has had mixed and unlucky fortunes since and has confidence issues as well. Regularly he still gets the lowest marks of any player in the Hull team. But he is in the Hull team which are 3rd. Lets not blast individuals who are still doing their best, and by that I mean both McShane and Trap. Dunphy, well, we know he’s a proverbial s stirrer, so take no credence to his rants in the RTE canteen (when/if you’re in there).

    MK

  15. B

    Tough shit.

    No sympathy for coked up overborrowed aggressive tossers. I come from an area that was built up and run by the breakfast roll mafia. Houses on one side and dead drug dealers on the other. Dealers that get themselves smiling on the front of the paper and are untouchable.

    Let them hang out to dry. Let them go bust. At least now some reality has returned to the market. It is impossible to compete with people who have unlimited access to resources and every intention of making everyone else wear their risk and make them rich.

    Its short-term and immature. How is Ireland different to when the Brits were here? People are still unable to buy their own home at a sustainable and honest cost and their lives are run on the terms of the big land owner.

  16. There are a lot more at risk of the scrap heap than Breakfast Roll Man and who will help them?

    Somebody with an entrepreneurial bent below 40 can take a few knocks but thousands of others losing jobs in manufacturing and construction, have a bleak period ahead and we may well be facing 5 years of below trend growth.

    One of our ministerial dunces will no doubt sing the mantra about “upskilling” but a fat lot of good that will do for many people.

    The “plight’ of high profile developers will get attention but the wrecked lives from political short-term self-interest and incompetence, will be largely shielded from general public view.

    Even in towns such as Tralee, Ballinasloe and Dundalk, the unemployment level during the boom was as high as 15%.

    So in many areas of the country, what are the chances of re-employment for most of those over 40 who will lose their jobs?

    The Indo reports today that Mary Harney was fighting back tears yesterday.

    Assuming she quits politics at the next general election – she won’t have reason to cry, and still less than 60, with a severance package and pension of about €130,000 annually – indexed for life to ministerial pay rises.

    It’s galling that politicians who are absolute failures, also win.

    There is hardly a need for investigative journalism.

    11 years next month of a corruption planning tribunal and the land rezoning system that is Ireland’s crack cocaine remains untouched.

    A political system from the era of the donkey and cart where the buck stops nowhere and produces second-rate politicians from the teachers, small town solicitors and auctioneers, who have the time to develop a local profile or use a family connection, has blown the best opportunity ever, for sustained Irish economic development.

    • Furrylugs

      MH- Finfacts, for if this is yourself,
      Good factual analysis on the evolution and demise of the Tiger.

      http://www.finfacts.ie/irishfinancenews/article_1014898.shtml

      We are generally anonymous on here but some of the people are quite obviously not without experience in economic matters.

      As many more have suggested, people like yourself, DMcW et al would contribute greatly to the coming debate by establishing a like minded think-tank / influence group.
      Individual comment is healthy but achieves nothing. A loose rolling movement monitoring the situation, explaining to the layman and proactively suggesting alternatives would do no harm. mr ganley worried me because he was and is no more into Glasnost than the rest. A little self serving for my taste.
      And we certainly don’t want another Schicklgruber to rally the masses.
      A cautious, considered informed forum, more middle class than Hobbs, but not as aloof as Myers.

      Hennigan, McWilliams & Ross.
      HMR.
      His Masters Retribution.
      Just a thought but the powerhouse of this country needs a voice.

      What thinks thee?

  17. Lorcan

    Ger > I ask do people from all sectors have the capacity to work together for the common good?

    They certainly do. But there needs to be an obvious common good to work towards. The best example I can think of is the British during World War II. People accepted poverty and did anything they could for the common good, because the ‘good’ was their freedom from Nazi rule. It was an easy sell. Profiteering was next to illegal, even if a black market in rationed goods flourished.

    There has to be a clear and present danger before people change their attitudes, we are not easily persuaded. Look at the climate change issue. There is no longer any argument about if it’s happening, but we will not change our habits until large amounts of Ireland are permanently under three feet of water.

    There are many different alternatives to our system, but finding one that works would be hard and implementing the changes necessary for it would require a period of dictatorship. We don’t have sufficient military strength to sustain a coup. (deValera made sure of that). So we’re probably stuck with the one we have.

    We are too small and too open to go it alone. Our economy will continue to be lifted and dropped on international economic tides, we’ll just have to get used to it. The alternative is to become internationally isolated and end up looking more like Myanmar or North Korea.

    The holy grail of ‘stable growth’ is, like the holy grail itself, little more than a myth. Stable Growth is an oxymoron. You could probably have longer periods of stability if you didn’t want growth, but the need for growth makes the system inherently unstable.

    Socket > Perhaps you misinterpreted me. My fault. The comparison between the two Davids is an old one, and in my opinion is not an issue. They both of a habit of over-simplifying social stuctures to make their point, which is perhaps a little patronising but hardly an hanging issue. Brooks uses his to make social comment, McWilliams uses the same tool to make economic comment.

    I enjoy (though often don’t agree with) David’s articles. But they do stimulate lively debate, both here and elsewhere so are ceratinly worthwhile.

    Furrylugs > You were interested in credit ratings institutions. You should turn on Bloomberg if you have it. The CEOs of Moodys, Fitsch and S&P are being dragged over the coals by a senate committee at the moment. Very entertaining. Wouldn’t it be nice to have that kind of thing here?

    • Furrylugs

      Obrigado Lorcan,
      At the risk of appearing as a gloating old goat…….tee hee hee.
      I told ye they’d all start cannabilising themselves.
      Wait till it starts here.

    • Ger

      To Furrylugs:

      Agree with your comments about CEO’s being grilled, but they need to be grilled with consequences and not like Fuld walk away with $200-300 million. The people that approved predatory lending should be imprisoned, that would also bring into light the role of our politicians, so the whole house of cards would come dumbling down, hence the bailout.

      The Irish subprime market which includes the majority because they bought at inflated prices and now face the double wammy of negative equity and job loss – I don’t think people are fully aware of the consequences of this it is doomsday stuff. This negativity will affect consumer spending and confidence and all the knock on affects, expect shops and car dealer ships to close, end of luxury items for the masses.

      A shift in gears away from state capitalism to a more equitible society, where the high priest i.e property developers and accountants are not allowed buy 10′s of houses which then can be rented back to the lowly paid, who couldn’t afford a house in the first place. Where developers, mortgage people and bankers cannot conspire to rig the market for their own interests. Where politicians are held accountable for their policies and actions (I accept we have the ballot but some should resign especially over the current debacle over the budget). Where the figure head president is not paid €320,000 per annum, where Ministers are not on €250,000 – €60,000 plus certain running costs office etc, would be suitable to my mind, its twice the average industrial salary. Where indigenous and small businesses are develope and we get ourselves off dependancy on US multinationals & foreign oil, I could go on and on, but you get the point.

      I don’t think these are very radical policies, requires only minor changes, but the shift has to begin somewhere.

      • Furrylugs

        Ger,
        I completely agree and what you have said is a reiteration of the generally common held view held here that “something must be done”.

        However, though we may think these actions are not radical, the ruling elite would see any form of change to their grip on the direction of the nation not only radical but threatening and subversive.

        Remember the visible government and various spokepersons are mere mouthpieces for those who really wield power. To attempt to change the balance of that power in this country for the general common good would, I believe, bring forces to bear that most citizens of Ireland think exist only in Hollywood movies.
        I have some little experience of which I speak.

        • Ger

          i went to an affordable housing meeting run by a certain country council, they had representatives from the main lenders there (they obviously wanted to be dealing with the high rolllers and not us), the council were pushing houses but mainly apartments (the dog in the street knew these would be the first to depreciate) in Cobh, which incidentally has cancer rates 44% higher than the national average. The average property price was around 220,000-240,000. we now know that Gormless tired to increase or is increasing affordable ledning by the councils to 300,000 in a sad and pointless attempt to reverse the global trend. Thank God I am educated and smart, I trusted my judgement and did not engage. We now also know that the ‘market’ is offering houses cheaper than the affordable housing scheme. I feel very strongly for those who got suckered into this scheme and others by either unthinking or deliberately misleading practices, I would really like to ask those county council people what they are thinking. I find this country so frustrating, a house should be a right, i think it is under the constitution, it should not be an aspiration nor should it be such a source of strain and stress for people and those in relationships (married or unmarried) it is just bricks and motar. This so called property boom for a few will in time been seen as one of the most exploitative periods in Irish history. I am sickened by the avarice of my so called compatriots and I would say to Lenihan who couldn’t come up with his own cliche, patriotism is the last refuge of the scoundrel, shame on them all.

  18. Deco

    Breakfast Roll man is a consumer berhaviour buyer group entity. He is hyped up with confidence. False confidence.

    Breakfast Roll man is missing the character strengths/virtues needed to get him through the next decade. Modesty. Humility. Frugality. Honesty. Directness. Efficiency with resources. Sobriety. Calmness. Self-respect. An appreciation of value that is not built on hype and deception. An ability to see through empty promises, bad deals. A healthy dose of scepticism. That is an awful lot to learn in a short spell. This all raises two questions.
    i) Can breakfast roll man turn it all around ? Has he got the intellectual capacity of changing and becomming a survivor ? or will he rely on cheating, lying, etc.. to get it all together. In Ireland today, it is far more fashionable to be fashionable than to be humble. So for the most part he will fail.
    ii) How will the decline of breakfast roll man affect the rest of society ? Can the society change intellectually and culturally to be more efficient, more honest, more transparent, more humber etc….

    We are in for a rough time. Breakfast time will probably waste a few years in substance abuse, rather than relearn it all again. Humility became unfashionable in Ireland some time before Noddy moved into the Aras. Irish society is rotten with pride. Ok the French are proud of their society, the Germans of their engineering, and the Indians of their ancient and complex culture. But in this country, the stuff that we are most proud of is either disappearing quickly or is nonsensical. Our property boom. Our alcohol consumption pattern. Our diet. Temple Bar. The M50. Dublinia Cool. I mean we are a culture in collective self-delusion. The Irish love being proud. It is a short cut to congratulating yourself for your achievements. But now we are fiding that our ‘achievements’ are creations of our own imagination. Like the Irish rugby team in the last world cup many Irish people have inflated ideas of our own greatness, and we really get sore when we find out the truth of the situation. But we are not sufficiently organized or industrious to create something to be proud about. No matter how much money we have to throw at community projects, we just make a mess of it. Give us French trams and we spend a fortune on the track, and when it is is completed the luas lines had thousands of faults. We have invested a lot in showing and pumping up pride, and now there is nothing there at the back of it.

    We as a nation are going to have to learn to work harder and better. For less money. With a lot less arrogance. Breakfast Roll Man is going to have to learn. It will come as a bit of shock.
    BRM is going to Australia in thousands because BRM is more loyal to a consumer behaviour, than he is to his society. For many Irish people, the concept of Irish society is drunken-ness. It is not about community. It is about pride and not about balance. There is a shock to the system. We could all knuckle down and fix it. But it is a case of everybody for themselves. We have become the Southern Californians of Europe – without the weather. Everything that Kunstler writes about the American suburbs applies here also. We have adopted a lifestyle from television, as a culture. Kunstler points out that this lifestyle is unsustainable. But it seems that nobody is telling that to the Irish. In any case, few would listen. Maybe the pensioners. And now the government in it’s ultimate expression of the society we have become wants to weaken the concept of society for them also.They are putting up a brave fight.

  19. Deco

    I have just realised. Irish pride and the American suburban lifestyle are proving to be a lethal combination for any concept of society in this country. That which Kunstler warns to America also applies here. But we are proud where the Americans have proven inflexible. How many are ready to say “I followed a delusion”.

    • Lorcan

      The more pride you have, the harder it becomes to swallow. I doubt many have the appetite.

      • Colin

        Lorcan,

        There’s a saying……Pride always comes before a fall. BRM is falling and I personally hope he lands with an enormous thud.

        Isn’t pride also one of the seven deadly sins? And BRM is a big sinner!

        I reckon BRM has broken most of the 10 commandments also.

        Eternal Damnation or Sackcloth and Ashes.

    • Furrylugs

      Me Deco,

      “We were led up the garden path like fools.”

  20. B

    Deco. You nailed it.

  21. Garry

    I was struck by how dated the whole thing is…. reading about breakfast roll man in his pomp is like watching reeling in the years… seems like another world.

  22. Fergal

    Guys, I’m one of those who looked at Ireland Plc, looked at the price of property in comparision to average industrial wage all the way back in 2003 and decided to emigrate.

    It has been clear since back in the very late 90′s that Ireland was going for broke in terms of our cost base (too high) and investment in infrastructure. It wasn’t possible to become even ‘comfortable’ on 20% above the average industrial wage without investing in property.

    For those that stayed and rode the wave – I hope it was fun, but surely you realise that no-one should bail you out. You had fun (profits), now you have a hangover (losses), why should anyone else pay for your ibuprofen? Those who stayed and kept their heads, were prudent in their investments and spending should under no circumstances be made to pay for the losses you have. BRM had the upside, now he’s got the downside. Tough. BRM made profits previously and didn’t spread his assets across multiple classes (stocks, bonds, equities, commodities and cash).

    Those who were prudent and have cash can now come and throw you a lifeline by buying property at reduced prices, thereby reaping their reward for prudence. Personally, I’d recommend waiting at least another 6 months for the property market to bottom out.

    For Ireland Plc to recover, like it or not property prices need to come closer in line to those such as Poland and Romania – for those are our true competitors. Only then can wage restraint come back into play and make Ireland attractive once again as a location for multi-national investment.

    A government that didn’t waste its taxpayers’ money on tribunals, excessive political salaries, weak contracts for infrastructure (think overpriced roads, Luas, Port Tunnel) and stupid largess would be asking too much given that the Irish electorate continually vote with some part of their anatomy unrelated to their brains.

    If you can, emigrate, believe me, the rest of the world is greener. Loyalty to Ireland is pathetic – look at what the government has done during the Tiger years, patriotism is a remanant of our evolutionary tribal past. Go where you have the best standard of living and sod Wolfe Tone. You’re human, ‘Irish’ is just a brand.

    Remeber that a salary of EUR 80k where you have only EUR 6K left in discretionary income is of less value than a EUR 70k salary and discretionary income of 7K!

    Fergal
    NYC.

    • Ger

      Hi Fergal, i was thinking of heading to the States, Boston, I agree with all your points, I too kept my head but this government has demonstrated no patriotism towards me I can barely afford to live here, my 30,000 state job just doesn’t cut it. Fortunately, my common sense won out and I did not fall for the hype over houses as appreciating assets, so my personal judgment is in tact thank God. Where are all those f**kers who talked this game up, marketing people, bankers, agents etc……………??

      • ire_in_Exile

        I’m afraid emigration is a very poor choice if one considers the national rather than a private interest.
        I believe a lot of Irish problems (gullibity, childishness, stupidity, cronyism, gombeenism, drunkeness and entertainment of the vastly unrealistic common assurance “Ah sure ye’ll be alright…”) are due to the fact that anyone worth their salt in anyway got the hell out of the country a long time ago.
        The nation now needs it’s brightest sparks most, but has not thought in anyway of how to encourage them not to leave, or if they have left how to bring them back…

        • Furrylugs

          Ire,
          A lot of us did come back lured by the possibility of finally being able to eke out a living here on the back of the “new way”.
          We came back to a country where being “home with yer big ideas” still prevailed. We challenged conventional traditional thinking and were shunned by the people that “stuck it out” and “didn’t take the shilling”.
          We explained to our English born children that having an English accent didn’t render one an automatic “Tan Bastard”.
          On the back of bitter experience from the Thatcher years, We tried to stop people swallowing the Big Lie and were told “we don’t do things like the Brits”.
          We were disheartened by the asinine nature of the establishment and the submissive nature of the indigenous populace so the only way to exist was to consider ireland and its people a foreign country and act accordingly.
          Rather than we immigrating to find a country that had moved on, we had moved on and the country had firmly ground itself into a post Catholicism Utopia for narcissists and megalomaniacs.
          So me, the brain and the transit van are heading off to pastures new. Again.
          Thats two swipes at settling down at “home”.
          There won’t be a third.

          The fundamental rule of help is that someone must want and appreciate it before one can give it.
          Ireland has a lot of self examination to do and I don’t have the time to help.

  23. BRM is in trouble because he misread his relationship with the banks. I feel sorry for him. There are three primary reasons he overpaid his “fair whack” on the land. The first is that the banks and government had created an entirely unreal pricing situation, based on collusion and self interest. The government were delighted with the stamp duty revenue. The banks wanted to reflect ever higher asset values for their interests in the appropriately named land-banks around the country.

    The second is that he was greedy. He needed more money to feed ever greater investments and an ever more expensive luxury lifestyle. The third is that he didn’t understand basic economics. I’m not trying to be condescending here but the banks enabled a group of economically unsophisticated people to believe they were the “masters of the universe” that Wolfe describes so well in his Bonfire of the Vanities. Compared to developers, stock brokers in Ireland were only in the hapenny place, as they say. However, the banks got developers to sign personal guarantees knowing full well they’d extract their pound of flesh in a default situation.

    BRM could be a nice bloke or he could be a bolshy ar^ehole (pardon the faux french) but that doesn’t really matter to the economy. Houses are not selling because people can’t get credit and believe the market will dip further. These beliefs are based on surveying economic turmoil. Any scheme that prevents the proper correction of market price is likely to make things worse as we still don’t have a realistic rent-to-market-price valuation.

    However, as I’ve suggested before the problem here should be shared between bank and developers. The developers borrowed money on the understanding it was a sound investment that had the backing of the bank. The personal guarantee does not absolve a bank of lending recklessly and creating an unfairly high risk profile. We need legislation that enables developers and home owners alike to negotiate more affordable repayments on their real estate, especially under the circumstances where the bank did not pay due attention to the affordability of their loan. It’s clear that without this legislation, banks cannot be trusted to maintain reasonable risk profiles. .

  24. Furrylugs

    “McWilliams uses the same tool to make economic comment.

    I enjoy (though often don’t agree with) David’s articles. But they do stimulate lively debate, both here and elsewhere so are ceratinly worthwhile.”

    I’m one of the greatest culprits here to make social comment on an Economic discussion board. Mea Culpa.

    Back to Economics.

    The Communist model broke down essentially because human nature dictates that singular power whether administered by State or individual eventually becomes corrupted and loses the original principal. Socially then, the people lose faith and react violently.

    The current Darwinian evolution in economic thinking, per se capitalism from Smith through to Paulson, has also broken down.

    I am of the opinion that a Gandhi, so to speak, of Trade, not just finance, will need to postulate a new model and then get an audience. I don’t see any way forward in peace time unless we agree to an intellectual solution.

  25. Philip

    Legislators, Bankers, FF and PS and probably most of the media are all one and the same. Developers are now being dumped. Who’s next for the next wave of get rich quick schemes? I know, let’s try some corporatism- Ireland’s sovereignty will be sold to the highest bidder on the basis of the “boys” keeping their jobs and the legislators etc doing all the dirty work. Expect your rights as citizens to be redrafted in exchange for digging us out of the debt spiral. It’ll all be done out of patriotic duty etc. And before you know it, this country’s talent and resources will be at the behest of some foreign power just so we can still buy oil to keep us warm in Winter…from what i have seen so far anything is possible.

  26. @ Socket twomey and Lorcan firstly well done with the link on the twin articles ! You see Mr Williams here is also whether you like it or not just another part of the over all system asking for twenty five Euro to go watch the American election on a big screen is just as bad as Breakfast Role Man asking for 400,000 for his badly built shoe box. Which he built off the back of cheap money and even a cheaper work force as he had all the east Europeans slapping up these houses.
    So Seamus if your in this situation I have no sympathy for your selfish greed as that’s simply what got you to this situation , if you had a brain or any intelligence you would have taken a trip out of this country to see how they build more effective in countries such as Holland or Germany and when there you may have noticed a thing called infrastructure but alas you like the other fat builders who are too self centered to get up that bit earlier in the morning to make a few sandwiches to bring to work with you each day you would have seen the reality that you were been spun an illusion, you have made your bed so lie in it now.
    Or maybe ask your ould lad and your old aunts to call down to your bank manager to threaten to withdraw their savings , then your slick double faced bank Manager might do something about your situation
    Like I posted before on this site , it’s time we as a Nation grew up and let Dev stay rotting in his grave he after all sold out Collins , so there is character for you and it is inbred into our FF and FG brigade.
    I didn’t see one builder in the good times offering to build or renovate a hospital ward , room or wing or send a few men down to their local schools to knock the pre fabs down and put up a solid structure. For as much as we clap our selfs on the back thinking we’re great fellas alltogether sure doesn’t every body love us ! , ….they don’t , most think we drink too much , but we know how to enjoy our selfs . What a Great lot we are !.
    The entire system is rotten here , and it’s going to take a few more thousand on the dole and a few more family homes repossesed before the populace cracks and then like the pensionsers take to the streets to demand a change , then I hope men like Michael O Leary or Declan Ganley step up to the plate and give the electorate a choice , or now maybe Labour . But this will be a big job yet we have to do it and the sooner we switch off the cable and get off our arses expecting someone else to do it the better it will be for every body.
    Every thing in the entire system that we have has now to be questioned. The thirty or forty Irish based readers here should even meet up in a room and see what we could do to put a few cogs back into the wheels ….
    it’s as Furry would say …only an opinion

    • Garry

      Bit harsh…sure we’re all part of the system, and Seamus took a risk..it didn’t work out, thats life. We need more Seamus’s and David’s but in different industries, ideally bringing in a few bob from abroad.

    • seamus

      To Brendan W,

      I think your malice towards builders is unwarranted. I am not a “big builder” and neither are friends of mine in the same boat. I only ever employed 4 or 5 men so my development was small. Also, why is it the notion of trying to get up the ladder so abhorant? I dont know what you do but YOU had the same funds/wages to rebuild schools that I had! Im not rich never was, just took a chance a risk and now stand to lose all. Im not looking for sympathy either. My point however is quite similar to yours in that the system – in retrospect – is and has been wrong. Putting all your eggs in one basket with encouragement from the government and banks has led to this sorry situation. In my rural locality businesses depending on BRM’s spend are all going wallop. Shops, deli’s, furniture outlets, bathroom suppliers, petrol stations, equipment suppliers the list goes on and on. The current situation is affecting everyone! All Im saying is that slash and burn (insular thinking) in government policy is wrong. Efficiencies and changed economic policies to encourage industries in I.T., innovation etc will encourage growth. Reductions in education etc are insular and do not look at the long game.
      So if your happy with my misery so be it. It just goes to show the nature of Irish people. Those that take a chance and those that slag off!!!

      • @ Seamus I have no malice at all towards a small individual like your self trying to take a step up the ladder , but during the ‘boom’ times I done some marketing work for a few ‘small builders’ when dealing with one of my first clients I asked how much it was costing him to put up a 3 or 4 bed house , 60 000 tops ( taking out the land cost ), while he was looking to make upto 140,000 profit per house , that’s a profit of over 220% . My issue is why such greed ? , fine the banks and estate agents were working with each other driving the prices ever higher while no builder had the moral courage to look for even just making a 100% profit . Another figure builders worked off was 1 in 3 , every third been profit . This profiteering off the backs of your fellow citizens no matter what way you want to dress it up is wrong.
        So I don’t see why you or any developer big or small should be given any assistance to get back to this racket again.
        As I have written in earlier posts here it is time for a revolution ( Lorcan I’m sure we can work on section 16 ? ), and it is beginning to happen . Bank of Ireland is back down to 1.60 so by the end of next week we should see Biran Lehinan putting our money into it, if this happens without the top heads been removed , then if we don’t take to the streets like the pensioners, students, farmers and teachers , those who at least bank with them should go and take their money out of it, maybe this would force Leno to listen to people power.

  27. Deco

    Furrylugs – I realise what you are saying about PSM, Prawn Sandwich Man. You are correct. We have bailed out PSM. And it has degraded our collective self-respect. In any other country, the Sean Fitzpatricks and Michael Fingletons of this world would have been taken out of their plush offices, and told to stop being a (expensive and insiduous) parasite on the rest of society.
    But in Ireland they can phone the lawyers trying to run the country’s finances, and get ‘orphans to the world’ levels of sympathy. Meanwhile the real orphans of Ireland’s substance abuse culture are left to a 100% probability of crime and failure.

    Furrylugs you explore which model of economics could prove most successful, or even less harmful. But in Ireland we tried socialism in the 70s and early 80s. Then we had enterprise capitalism from 1987 to 1998. Then we had finance/consumerist capitalism from 1998 to 2008. The enterprise capitalism was probably the most successful model. If it was implemented again it could fix the problem. But I think there is so much bad unworkable ideas in the minds of so many influential people in this country. The biggest of these is personal irreponsibility, ambition to be part of the Economic Rent Infrastructure, get state bailouts, And these ideas have to be worked out. We need a McSharry and Dukes combination to see sense like happened in 1987. This is the only way political leadership came about. And to make this happen we will have to vote along lines of ability and intelligence in the next election. Now, I have a theory that will surprise you. The pensioners in the protest today are more likely to do that that BRM. BRM will harp back to the Bertie days, and watch Parlon slither his way amongst his mates in the government. Therefore BRM will vote for FF in the next election. PSM definitely will. Because both regard the state as big daddy provider. And this is what politicians like Cowen etc.. see themselves as – providers of funds. Now this is socialism for vested interest groups. The ultimate Marxist joke. Children of the 1960s revolution and thereacter, liberals to the core, from priveleged backgrounds, all respond to polticial activism on behalf of the vested interests,and responding with funds. They talk about money like as if it grows on trees. And now suddenly they are in a world where it has to be earned. Socialism of the rich is causing societal decline, moral decline, and economic decline.

    No – to start with we need to stop socialism for the rich. This means more Lisbon richter scale shocks to the political establishment. This means pressure to sack the incompetent oafs who caused the current problem. Strict control of the banking industry by rules. We have rules telling farmers what weeks of the year to put cow dung on the land. But we can’t even make a single rule to restrain the banking industry. The political is not one party, or one media organ. But the entire body. It might look as if there is competition between the different elements. But it is like competition between ANIB/AIB/BOI – a bit oligopolistic. Look at the way the Greens settled into their leather seats, and Gormless almost fit to cry on Ahern’s last day. Tackle one part and the core remains intact. The entire object needs to be destabilized. If it is not destabilised by the call for reform now, the situation will keep getting worse and worse. There are just too many stupid mental concepts to wash out of too many people in our economy and society. And there is no initiative to do it. We have a nice snootiness HiCo class who ridicule the likes of Palin and Eliot Spitzer, and love Obama. Well they will get President Obama, and he will punish the Us multinationals for using Ireland as a tax-efficient location. And then the country will be utter chaos in ten years time. The we will have an ugly revolution. The delusions in Irish society are the source of our problems. Delusions of grandeuer. Delusions of cohesion. Delusions of business ethics. Delusions of workmanship and professionalism. A lot of what was ‘important’ for the last ten years is now being revealed to be an illusion that even David Copperfield could not create.

    Yes Furrylugs, “We were led down the garden path”. Oh yes. But it was different here to the Soviet bloc. In the Soviet Bloc, the people knew the establishment was lying as a matter of routine. In our society, and in the West in general, nobody ever doubted anything that they they were being told. Everybody was rushing along buying the latest mobile phone, organizing the 2000 mile stag weekend, and getting more loans, and more stuff that was not needed, thanks to banks with no money of their own. There was a lemming like frenzy. Clearly the Russians, the Poles, the East Germans, Hungarians, Romanians were much smarter than BRM, much smarter than the Irish, the English, the Californians, the Icelanders, etc….Something that nobody will readily admit. At least not yet.

    • Furrylugs

      Deco,
      That is fit to and should be, published.
      Well put.

    • Ger

      Western societies are a variety of state capitalism, with economies that rely very heavily on the dynamic state sector for innovation and development, socializing risk and cost and privatizing profit. This current system often rewards the worst aspects of people i.e. greed and desire for power. In a proper functioning system, innovation, entrepreneurialism would be rewarded but not at the expense of the person purchasing the property. It is good to have creative, bright people, working away and providing employment and solutions but it is not right to have people paying 350,000 – 400,000 for a house that in real terms is worth half that possibly even less.

      We have to look at how the ‘system’ functions as a whole, and examine the roles of certain ‘actors’ such as real estate agents, bankers, politicians etc – they all made a buck which the worker, tax payer, the ‘middle class’ picked up the tab and are now caught out.

      The corporate box man is well protected from the current downturn, he thought in terms of cycles, was advised to do so and was waiting for a downturn, for them the sales have come early.

      The aspirant small-middle size developer has just learned a very expensive lesson in market economics, you can get burned badly by bigger players and forces. I do not rejoice in this, but then I was ‘suffering the pain’ at the height of the boom. with my 30K job, bombared by the Celtic tiger messages, the peer pressure to buy a property and the absurd programmes on RTE and TV3, which shamelessly advertised absurd materialism, with places in the sun, and MTV cribes, the conspicious consumtion, women driving absurd Landrovers and 4×4′s out of Tesco’s!! And now the unrealistic consumer expectations which you can see written all over the faces of younger people., the sense of entitlement which will not be fulfilled. Appalling.

  28. [...] developers who’ve been making a fortune over the last ten years, but according to the bowld DavMcW they’re fucked [...]

  29. dav

    if there ‘s 180 trillion floating about in space in the form of derivatives then how will the whole system survive ?
    if the irish government is only liable for x amount maximum? isn’t it possible that one of these high stakes bets could come back on one or all of the banks in one form or another?
    is all of this a ploy by the real powerbrokers of the world to make people call for a world central bank,which would have the power over country’s central banks which makes them much easier to control? the illuminati ?possibly?maybe?

  30. AndrewGMooney

    A philosophical perspective – hopefully containing impermissible mixed metaphors!

    Dear Irish Breakfast Roll Man, Loadsamoney (UK) and Patio Man (USA). You are all in this together so I’d like to offer you all some solace. When you’re down to your last few Euros, Pounds or Dollars: Download a song called ‘Spinning Wheel’ by Blood, Sweat and Tears. Then purchase a copy of ‘The Consolation of Philosophy’ by Boethius. You can read, can’t you? Even though, in your innocence, you never read all those contracts you signed in those plush city centre banker’s offices.

    Whilst you read this elegant, timeless tome: Put ‘Spinning Wheel’ on loop play for the next 10 years, on your I-Pod, in your SUV, until it’s repo’d: Then play it in your 10 year old Fiesta. Read, listen and learn. Whilst enduring bankruptcy and beginning on the long, hard road to financial, ethical and social sobriety.

    No, you certainly DO NOT deserve a 2nd chance at the expense of future generations. You were all complicit with every crooked con-artist estate agent, solicitor and ‘valuer’ in coaxing, cajoling and coercing generations of youngsters into unmanageable debt. They are the people who have my sympathy, stuck in negative equity shanty-shacks within and around the M25 and the M50. They are the people who deserve a second chance, even if some of them were just as much on the make as you lot. But, like you fools, they won’t get it. When they lose their jobs and can’t make the payments on the house, the car, the credit card: They won’t be given a second chance. They’re what Leona Helmsley called the ‘little people’ before she died and left all her dosh to her dogs.

    Breakfast Roll Man and cohorts, you are, in the greater scheme of things: Dispensable. Bound head to foot in personal guarantees, caught in a net. Little Fish waiting to be devoured by the Big Sharks. Sharks who have ensured that their disintermediation and deleveraging will be shared fairly amongst all. They’ll rip right through your pathetic ‘safety nets’. Your future wages, your blood, sweat and tears, will ensure they are protected. That’s what happens when Little People get Big Ideas about Freedom and Finance: They get caught in a net of debt, then chewed up and spat out. Till Fortuna’s Wheel is ready to spin again. It’s sometimes called The Business Cycle. Some thought it had disappeared forever. This disappearance act always traps the unwary. Fortuna spins The Wheel capriciously!

    You rode The Big Wheel all the way up, ignoring all the signs that said Greed. Now you’re plunging down towards The Bottom but it’s too late to notice the signs flashing Fear. You enjoyed the ride. You thought it was safe, because The Funfair you entered was insured by The Banks and The Governments. You goaded The Bull, now you must stand and face The Bear. You don’t even know what I’m talking about, do you? Your type never do. No class. No breeding. No finesse. Just upstarts. Begone from my sight! Katya, bring me more wine. Grapes.

    ‘What goes up must come down, spinnin’ wheel got to go ’round, talkin’ ’bout your troubles it’s a cryin’ sin, ride a painted pony let the spinnin’ wheel spin. You got no money and you got no home, spinnin’ wheel all alone, talkin’ ’bout your troubles and you never learn, ride a painted pony, let the spinning wheel turn’

  31. Nono

    Hello people! We have the opportunity of a lifetime to unite together and put some real pressure to the government. I’m not talking about elections. I’m talking about the very real threat of everybody taking their savings out of the banks if things don’t change pronto. I’m talking seeing a few heads rolling at the head of the banks, I’m talking shifting the policy from supporting the builders and the banks to supporting small businesses and enhancing infrastructure in this country. If we could have someone who would organise a movement of the people, be a spokeperson for us all and say to Cowen “look we want this and if you don’t do it, we’ll pull the plug”, he’ll have to listen. For once, we can have our say in the politics of this country and not follow blindly the cronies, we should use this opportunity.
    How does that sound to you David?

  32. The Eye

    ……the Russians are coming for Bank of Ireland..

  33. The Eye

    Dav I agree with you to a certain extent, this is all a man made problem in the past to take over a country you needed weapons now all you need is finance and by keeping people in debt by giving them credit they become your slaves. During the boom I noticed nice 1st time buyers out bidding each other by getting a longer term on their mortgages…..a 35 year loan… thats modern day slavery. If these terms had been capped to say a maximum 25year it would have taken a lot of heat off the market!

  34. daltonm

    “Whoever wants to win the next election has to get inside Breakfast Roll Man’s head. He wants security, not risk; familiarity not novelty and above all he wants to be given a second chance. Like thousands of others, he deserves it. But who is going to throw him a lifeline? Can you afford to pay for his parachute?”

    One problem here is that thousands of others are not being given a second chance. What about the investors on the stock market – do we give them a second chance? No – It says clearly that the value of stocks may go up and down.
    What about the house buyers who are losing their homes on daily basis? No- It says clearly that your home is at risk if you do not keep up the payments on your mortgage,

    Despite repeated warnings from economists such as yourself David, up until June 2008 banks continue to loan to developers, 20% more than in 07?

    Let there be no second chances, let the lesson be learnt hard and well. Second chance to these people means it can start all over again. They screw up and we pay?? I don’t think so……….

  35. MK

    > Those who stayed and kept their heads, were prudent in their investments and spending should under no circumstances be made to pay for the losses you have. BRM had the upside, now he’s got the downside.

    The problem is that the prudent people will have to pay for the problems of the country via tax. There is no hiding place. The innocent pay.

    > the banks got developers to sign personal guarantees knowing full well they’d extract their pound of flesh in a default situation.

    Possibly, but the banks themselves have not judged the scale of this slowdown wisely. They were betting on a soft landing, a protracted flat outcome which would mean managed house prices staying flat perhaps losing slowly in real-terms but stable, demand and supply balancing, etc, and importantly those with loans (commercial, developers, consumer/mortgage) able to pay them back in a managed fashion. Sure, there would be some falling by the wayside in such a soft landing and the pound of flesh would be extracted as you describe. However, the fear now is that there is a ‘wave’ of defaulters potentially. That is certainly something that the banks didnt want and their share prices reflect that.

    > The developers borrowed money on the understanding it was a sound investment that had the backing of the bank.

    No, this is not what a loan means. You dont get a loan and treat it as a sound investment because a bank gave you that loan. That would be like stating that negative equity is impossble or that house prices cant ever go down. I do know someone personally who ‘s mantra on the way up was that “property never goes down in value in Ireland”. I dont know his expsoure situation now, he is probably well above negative equity levels still. But there were many like him who were blind to this actually happening.

    > Developers are now being dumped.
    Not exactly, and certainly not by the government. If you look at any Form 11, its insightful in its entries of the tax ‘reduction’ schemes, otherwise known as tax avoidance. There are still those that have ‘invested’ in property with a tax write-off system which is still in place and still active. This is still buoying the market artificially as tax payers can avoid 41% of tax. Some of these schemes arent due to run out for 9 or 10 years or so I think. We still have property price supports, which support developers.

    Seamus> With the development and my own personal guarantees I stand to loose everything.

    Sorry to hear that. Its unfortunate timing in your case as others before you were able to ‘get out’ in time. But that is the nature of any ponzi scheme. It catches out the unaware and someone has to lose.

    > Shops, deli’s, furniture outlets, bathroom suppliers, petrol stations, equipment suppliers the list goes on and on. The current situation is affecting everyone!

    Yes, but these businesses were built up on the back of a credit binge. So it was in a sense false wealth, money that was spent today but had to be paid off tomorrow. Just because someone drives a BMW and lives a lavish lifestyle, doesnt mean they are not living beyond their means or are in debt. The service industry, the places making the breakfas rolls, will have to cut back. And it makes sense if what was driving most of it was credit.

    > if there ’s 180 trillion floating about in space in the form of derivatives then how will the whole system survive ?

    That is a problem. If Credit Default’s and other derivatives come crashing down, and remember they are only held up on trust, the virtual money global credit binge could come down with a wallop. We have not even started to see the tip of the ice crystal sitting on the tip of the iceberg on that one. It may not crash though. We just dont know.

    MK

    • >> the banks got developers to sign personal guarantees knowing full well they’d extract their pound of flesh in a default situation.

      Possibly, but the banks themselves have not judged the scale of this slowdown wisely. They were betting on a soft landing, a protracted flat outcome which would mean managed house prices staying flat perhaps losing slowly in real-terms but > stable, demand and supply balancing, etc, and importantly those with loans (commercial, developers, consumer/mortgage) able to pay them back in a managed fashion. Sure, there would be some falling by the wayside in such a soft landing and the pound of flesh would be extracted as you describe. However, the fear now is that there is a ‘wave’ of defaulters potentially. That is certainly something that the banks didnt want and their share prices reflect that.

      I’m not disagreeing with you but they didn’t put the personal guarantees in place because they expected a soft landing. These were requested so they could manage a default situation by acquiring partial or full ownership of the developer’s other assets. If all the loans are with bank X then the bank is exposed anyway and gaining the developer’s interest in the property and other properties, which may be small given the degree and layers of leverage, will still leave them with an over-valued landbank on their hands.

      > The developers borrowed money on the understanding it was a sound investment that had the backing of the bank.

      No, this is not what a loan means. You dont get a loan and treat it as a sound investment because a bank gave you that loan. That would be like stating that negative equity is impossble or that house prices cant ever go down. I do know someone personally who ’s mantra on the way up was that “property never goes down in value in Ireland”. I dont know his expsoure situation now, he is probably well above negative equity levels still. But there were many like him who were blind to this actually happening.

      I never suggested this was the definition of a loan. However, the majority of builders were not particular sophisticated in their understanding of boom/bust cycles. David sums it up best when he suggests that the developer had confidence, perhaps based on oral assurances, in the bank to ease payments for a while by rolling over interest or pushing out the maturity. He also had false confidence in the soundness of the deal based on the willingness of the bank to back it. It’s human nature to trust authority when a system seems complex and, somehow, miraculous. That’s the basis of most of the world’s religions after all :)

      I know a few developers who were led to believe things would be alright if the market dipped. They wrongly felt comfortable with the huge risks but the banks pushed credit into their veins like a smack dealer. Why? Well because the banks were making substantial profits from lending money to builders. They didn’t do it out of a sense of charity. The banks wanted a happy and prosperous BRM looking for his daily fix of credit. BRM was hooked on bigger and blacker BMW’s X5s and perhaps a helicopter or two. Sure it was wild greed with the hindsight of Oct 2008 but it seemed reasonable to many a BRM. It also seemed reasonable enough to the rest of the country to send house prices spiralling.

  36. Ger Kennedy

    David

    F__k BRM. He was a greedy little pig with his snout in the money trough playing with the big boys. His philosophy, along with the prawn sandwich brigade, was a line of BS. Nothing more. They robbed the people of Ireland blind for 15 years and enriched (sic) themselves in the process. It was like an addiction however. They didnt know when or how to stop. It all went too far and now it ends in tears. It needs to end in tears. Ireland became an economic miracle by manufacturing and exporting. Admittedly it was mainly done by multinationals but it was what brought Ireland out of the dim dark days of the 80′s. Then like and ungrateful teenager, she turned her back on industry and innovation and turned to property as the new religion. In 2005/2006 there was scarcely a business decision made in Ireland that did not focus in one way or another on the value of the property associated with the business. Look at Jurys in Ballsbridge as a prime example. It was a fine business, made money and provided employment. But it got sold and loads of people lost their long term jobs because the “value” of the property was so high that it dwarfed any profits any real business could generate.

    So let BRM crash and burn. Let him re-emmigrate. He is no loss. The property pyramid scheme is no loss. He was a cog in a giant BS machine. The BS is at an end. The game is up.

    BTW I like the term “Bertie Boom”. Can we call what is happening now the “Cowen Crash”?

    Ger

  37. Garry

    The comments to this article are even more interesting than the article itself… ranging from malice & delight in seeing BRM’s downfall to more considered analysis, even Davids description of the stereotype is completely without sympathy, showing a thicko with a taste for bling and trophy girlfriends. The article does show ‘fin boy’ but this kid was just doing the banks dirty work. Cant help feeling theres a bit of snobbishness in the reaction to BRM’s downfall…

    Keep yer eye on the money lads, its all starting to come out now… http://www.herald.ie/national-news/biffo-running-mate-sued-over-scam-that-made-him-millions-1505210.html Now if BRM deserves no sympathy, these guys deserve to be shot.

    But they don’t have ‘tacky’ tastes in stuff, come from the ‘professional’ classes and are above parody?

  38. David Ring

    I am loving it!!!! I had the balls to stay off the mad property ladder because I knew this would happen. 350,000 Euro for a 1 bed flat in BRAY! Insane prices and so many of my friends fell for the idea that property can only ever increase in price. It was bad form on the banks and governments part by hyping it up but at the end og the day Breakfest Roll Man got f**ked because he was greedy.

  39. Liam

    As an earlier poster said, the comments on these pages are better than the articles. nice to have found such an articulate and informed bunch on the interweb, i don;t feel there is much i can add really.

    Well, except for BRM, for whom I have this:
    http://www.wikihow.com/Live-in-Your-Car

    -L

    • Furrylugs

      Liam,
      You probably missed this as a newcomer.

      We all agreed that newbies should send available cash to

      http://www.unemployedeconomists.bog

      where we will invest the donation and send you a handwritten certificate of our undying gratitude.

      Since we have all been latecomers to the Tigers benefits, we think this is an appropriately crooked way of honouring those fallen in the Great Finance Wars of 2008.

      It’s a wet day and I’m bored.

      • Liam

        Not a latecommer to the party, I bailed on the ideal of property ownership when in 2003 after a trip to a mortgage broker I realised sanity had departed the property market in the UK. I have been watching Ireland go completely bonkers for the last few years, waiting for the crash. No way in hell you’d catch me moving back there now, and not for a long time.

  40. Philip

    I was chatting to my daughter this morning. She told me that because of the ensuing cutbacks due to the budget, the physics and chemistry teaching for the new 5years will probably be cut back. Reason? Becasue the majority of girls (65% plus) do not go for this hard science topics.

    Frankly, I really do not give a toss about BRM or his well identified and more culpable dickless equivalent – PSM. What I witnessed is an initial view of the first stages of grass roots elimination of hard skillsets – which is actually sexist as well. To date, no bankers or developers or regulators etc have been fired or severely culled. Yet we have our next generation being deliberately targetted to make them as THICK as the idiots running this place in an effort to save their asses.

    Furrylugs, Deco et al…youre right on the money. The 70 yr olds have led the way. If you have kids, you need to be afraid for their future.

    To all BRMs, tough luck guys. I sympathise. But not as much as for all those laid off from real manufacturing jobs over the last 8 years to join the ranks of the burger flippers for our so-called service economy.

    • Furrylugs

      And Phillip, how many of the leading lights responsible for this Debacle are female?
      But thats a whole new socio-economic arguement and I promised to stick to the raison-d’etre of this site.

      I’d send said daughter to Bangalore or some University thats actually teaching rather than hitting KPI targets.

  41. Jim Bolger

    David

    Would you mind informing us of where and how you found out so much about Katya ? and about her backround ,?
    I’m sure a lot of people would be very interested !!

  42. Rob

    The great tragedy of all this is that anyone with an ounce of sense saw this coming. Take out building, the public service and to a lesser degree agriculture and there is very little else going on in the Irish economy. The people to feel sorry for is middle Ireland who kept their heads down throughout all this and may have to pay the price. The average family. You know the ones I am talking about Mam is a teacher or a nurse, Dad is a small farmer or factory worker. Two or three children who work hard in school play their soccer or GAA good kids. No burden on the state pay their VHI, income big enough to live just comfortably through their own hard work but not small enough to get state support. Let us call them AWF (Average Working Family) As always those in the middle who do things right are caught in the middle. FACT we are only still a rocky outcrop on the edge of Europe with no natural resources and lived in a fantasy land that we were some Mediterranean paradise with their café lattes and parasols on the streets as they froze in the rain and deluded themselves.

    AWF never were enthralled with the way Ireland was turning out and we see who was running the show, FF builders, developers, a self appointed D4 set whose mantra was that this was the only way to live, and a useless collection of TD,s made up of small town solicitors’ and farmers who are far away what you would call statesmen in any other European country with no academic or professional experience to run a country in times of economic crisis. Mary Coughlin a prime example. What have Cowen and Coughlin got in common both their Fathers were T.D,s. Irelands own peer system.

    What David should do is flesh out more his point about BRM man feeling vindicated driving past the ruling class of Ireland of the 80,s it was a natural evolution that BRM exists. Ireland needs to get past patronage and family connections or we have no hope it needs to become a hardworking meritocracy. Our university system is and was equipping students for jobs that never existed in the Irish economy and never will if nothing is done to plan for the future. Emigration was still going strong during the Celtic tiger years its just no one noticed. It was dressed up as taking a year out finding yourself etc. but the reality was quite different. Look at the composition of your local GAA team mostly composed of young men involved in construction one way or another. This kept life blood in Irish towns but when they start moving which they have already to Dubai and Australia this fact will be a rude awakening. It was policy madness to prime the boom with Eastern European labour.

    They were always going to come in their droves. Willie O, Dea in defence of Ireland being one of three Britain, Ireland and Sweden to allow open access stated that 30,000 would come and cited the example when Spain and Portugal joined the EU in 1986 that people said the same thing were scaremongering missed one vital point. A whole generation in Spain and Portugal were not educated to learn English unlike in Eastern Europe. Moreover we will have to really hit rock bottom if we reach their levels of income. For this reason they will stay and a lot of them. I know I have lived there for periods of time Non EU immigration is also going to cause hassle; political parties need to grasp this nettle and quick. Racism will bubble under the surface as long as political parties do not acknowledge it as an issue. Hundreds of Chinese and Nigerians and other Non EU citizens entering freely do not illustrate a reasoned immigration policy. What has all this left Ireland facing into the future an economy on the verge of collapse, bleak unfinished helicopter houses and estates (I call them that because they look like they were dropped from the sky above no landscaping, amenities, finishing etc) mass unemployment of tradesmen in Irish country towns and villages and a 16 per cent foreign born population in the space of a few years who will find it the most difficult to support themselves and a disjointed family and community support structure which will not be able to fill in as back up to those who fall on hard times unlike the 80,s. I am talking about when for example when the 25 year old young man gets laid off the building site and before he would help out the Dad at home and he would tide him over. Now Mam has a different boyfriend every night so that kind of social stability is not there. There is also much less solidarity in the community which will show a new flavour to this recession. The results may not be pretty. Whether that is a product of individualism, PD policies family breakdown or other’s is debatable what can’t be denied is that the end product will not be pretty.

    Ireland and the Government need to initiate urgently a National Forum for Economic Diversification which will chart a future out of this sorry mess. As long as Ireland holds onto the notion that the only jobs that exist in the collective psyche are construction, farming and the public sector we are going nowhere.

  43. juicylucy

    David, always enjoy reading your articles.

    I don’t think people realize that you can’t have a 15yr boom & then a 2yr downturn, I think the downturn will last up to 5 yrs before things start to pick up again…….slowly.

    During this 5 yr period I think house prices should fall to realistic prices like €100,000 for a new 3 bed house, similar in price to a new 3 bed house in any developed country in the world. I think that prices should not exceed a 25yr repayment term, any house that takes over 25yrs to repay is overvalued in my opinion.

    I think unemployment figures will hit double digits shortly, there is nothing going on in ireland when you take building out of the equation.

    Shopping centers, hotels, furniture stores, diy stores, clothing stores even the shops on the corners that sold builders their breakfast rolls, everything revolved around construction or the disposable income available from construction salaries.

    The education system in Ireland needs a major revamp, students are being taught to be good employees with there degrees and phd’s, but I don’t ever see a major business like Google, Facebook etc coming from Ireland.

    The education system doesn’t encourage creativity and runs with the mind set of “get good grades so you can go to college and get a phd and then get a government job in education”

    The education system itself has just become a money making scheme, providing jobs in the education industry instead of the construction industry.

    I think that this recession will stick to Ireland a lot longer than the rest of europe because the Irish fundamentals are so very very unsound.

  44. John H

    Juicylucy

    You are spot on in regards to education

  45. Ger

    I only hope that all the comments and frustration here turns into concrete action in terms of the vote or activism otherwise future generations will be exposed to the same exploitative BS that we have seen in arguably one of the worst periods of avarice in Irish history.

    I hope that people don’t simply use this as a forum to blow off steam, we are not yet atomised (isolated individual consumers), as the OAP and students proved, people power can change things. I would ask all those who have been sufficiently motivated to respond in detail here to think about what they can do as consumers etc to change this country otherwise we will be covered by more than 5 feet of water. To paraphrase the words of a native american, who had a lot of experience of being exploited by others: “only when all the trees are dead, all the rivers polluted, the birds gone from the sky, the old stories forgotten, will the white man learn that you can’t eat gold.”

  46. Juicylucy

    Thanks John H

    I think the education system in Ireland is becoming similar to the HSE, you can pour billions into it & still have nothing to show for your investment, the cost of education is starting to outweigh the benefits.

    People in Ireland spend years in education only to find that there is nothing for them to do when they reach the top levels.

    Irish students and graduates etc need “opportunities” not a “little pull” from friends or family etc…… to get them that “lecturing job with all the benefits”.

  47. gadfly55

    Inside the head of BRM, where second chances in the real world are entitlement to be sorted by local pols, sure, they can’t let us all go down. Right, he’s the man, well look at the streets of Dublin with students and pensioners, and this is just the beginning, when the government is put into receivership effectively because they can’t take political responsibility for creating Uruguay, as you described it. You should start looking at how ordinary people can actually protect the few coppers they have managed to put aside, and the necessity of allotments, and back to the land for self-reliance and sustainable communities. What do we need to buy now to look after ourselves, what do we need to learn. Read Buttonwood in the Economist this week, regarding the bear market, of which there were three in the twentieth century, the shortest of which was 17 years most recently. Rather than doing your schtick on various composite characters, give us the facts, the story, the history, the various scenarios. Look at Krugman and Stiglitz who both are Nobel laureates and actually present their perspective usefully in the MSM.

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