July 4, 2013

What new property bubble tells us about inequality

Posted in Behavioural Economics · 125 comments ·
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In recent days, two bits of economic data have emerged which give us an indication of what might be in store for society in the next few years. It may be very early to extrapolate, but it is worth considering if the latest information about house prices and food prices could become a trend.

A few months ago, this column wrote about the likely emergence of a two-tiered property market in Ireland, with houses in Dublin (and in south Dublin in particular) rising while house prices in the rest of the country would continue to fall.

Now, according to property website Daft.ie, this is, in fact, occurring – and at a pace that has caught most of us by surprise.

Dublin asking prices are up 5.3pc in the past year and rose for the second quarter in a row. House prices in Dublin are rising at rates not seen since early 2007 – the very tail end of the property mania. Prices in south Dublin are rising even faster, at 12pc since this time last year.

In contrast, prices outside Dublin fell 8.9pc in the past 12 months and this figure masks a fall of 6pc in Leinster, particularly in the commuter belt around Dublin, and an even more dramatic fall of 12pc in Connacht-Ulster.

According to the Daft report, “prices fell by roughly 3pc across non-city parts of Munster in the three months to June, and prices in the province are, on average, 10pc lower than a year previously”.

One way to interpret the gap emerging between house prices in south Dublin and the rest of the country is that the already wealthy are now seeing their property wealth stabilise and, in some cases, rise. In contrast, poorer parts of the country are seeing their wealth – derived largely from the value of their homes – continue to diminish.

If we add to these wealth figures the data we are receiving on inflation, and particularly in food price inflation, we can see something alarming taking place which, if it becomes a trend, could great exacerbate inequality in Ireland.

In the 12 weeks to June, food price inflation was running at above 5pc, this is 10 times the rate of inflation, which was only 0.5pc last month.

Now let’s look at the impact of the interaction of these developments on people’s everyday lives. Certain price increases affect certain types of people in society in different ways. For example, a 20pc discount in the price of a Ferrari will be of no consequence to the vast majority because most of us can’t afford a Ferrari in the first place. But for those that can and want a Ferrari, a 20pc discount could be worth tens of thousands.

Similarly, a dramatic increase in the price of bread will not be noticed by the rich but will have a huge impact on the weekly budget of the poor. We know that poor people spend a much higher proportion of their total income on food than richer people do. This is a worldwide phenomenon. So when food prices rise, poor people’s income falls much quicker because a bigger part of their weekly budget is eroded by the increase in the price of food.

If the difference between other prices and food prices isn’t too much, this process would be gradual, but if the rate at which food prices in the shops is rising is 10 times faster than other prices – as is the case in Ireland now – you can see how the weekly budgets of poor people will implode.

In contrast, richer people spend much less of their total income on food so the increase in food prices affects them much less and, obviously, the richer they are, the less they notice food prices at all.

Now let’s layer this picture of the poor being made poorer by rising food prices with the evidence from house prices. When house prices rise, people feel richer and, if they sell their houses, they are indeed richer. This feeling of wealth is called the “wealth effect” in traditional economics.

Many, but by no means all, people in south Dublin could be classed as already rich based on income relative to the rest of the country alone. Now we see that their incomes are being added to by increases in their housing wealth.

If this becomes a trend, we will see inequalities exacerbated. We know that children of richer people get a head start in life and so opportunities and income divides in the future become more and more ingrained.

Now look at the trends in house prices outside the capital. As house prices in the commuter belt continue to plummet, the wealth effect is opposite to that in south Dublin. Given that the vast majority of people in negative equity are those who bought in the Noughties, places that saw the most building of estates will be the worst affected.

People in negative equity are not only poor, they are worse than poor because they are in debt. If wealth equates to the value of your assets over the value of your liabilities, those in negative equity are worse than poor.

If the trends in house prices continue, the wealth gap in the country will become more gaping.

Ireland at the moment is far more equal than people sometimes think. If we divide the income of the top 20pc by the income of the bottom 20pc, we see that Ireland is smack bang in the middle of the EU average; less equal than Scandinavia but more so than the Mediterranean countries and the UK.

An equal society is something worth protecting. It is something that we should aspire to, including the idea of treating “all the children equally”. Equality is not only desirable from a societal/democratic/ethical point of view, but also from an economic perspective. If as many as possible have a chance in a society, more people feel they have a stake and more talent will emerge, with people working harder and smarter.

Hard work is infectious. It can set the standard and it can become the norm rather than the exception.

But if our opportunity and income become dwarfed by changes in wealth – driven by serendipitous changes in house prices – then lots of people will see the innate unfairness of housing wealth. Housing wealth doesn’t come from talent, innovation or creativity but rather the feudal concept of location.

We can’t afford for capital to get tied up in this overvalued relic again.

Already the trends in food prices are punishing poor people most callously now. It would be a disaster if we learnt nothing from the housing boom and bust and allowed ourselves to become enchanted by the hollow glitter of shiny trophy assets again.

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  1. Lius

    The early bird catches the worm.

  2. acoustamajive

    The Irish mindset will ensure that nothing changes. The entire population conspire to condemn the nation. Take the shoulder shrugging at the Anglo tapes as an obvious example. The “poor” will probably and take the approaching inequality with the same indifference. The population are slaves to their corrupt leaders, perhaps down to some kind of misplaced patriotism. Either way, it’s very difficult for the rest of the world to comprehend. Regarding the new property bubble, I’ll bet there are many Irish citizens who would sell their grandmothers to get in on it. Here in lies the core of the problem.

  3. The rise in prices in Dublin is related to a backlog of new entrants in the marketplace-all looking for a proper family home.
    Some have been waiting for years watching the prices fall,and now there is a realization that, because of the scarcity factor,there will be no further fall in Dublin 3 bed semi-D prices.
    New family homes are as scarce as hens teeth in the Dublin area.
    This government is compounding inequality by imposing new property taxes which do not discriminate between rich or poor.The owner of an average 3-bed semi-D willalmost certainly pay proportionately more of his income than the owner of a million Euro value home in Dalkey.
    Ditto the new water taxes.
    We are being spinned that there will be a basic allowance and that those who are careful will not have to pay any money at all.
    Rubblish.
    How careful can a family of six (two adults-four children) be in their water usage.?
    I am just back from Germany where a cubic metre of water costs between 5 and 7 Euros, depending on the region.
    This kind of a bill will be needed to recoup the water meter charges and repay the Civil Servants National Pension Fund (which is bank-rolling the project.)
    Make no mistake this is a tax grab lined up to hit the average family with another iniquitous bill every month.
    There is, we are told, likely to be a “standing charge” of 30 Euros, similar to the Gas/ESB stealth robbery,before a drop of water is consumed.

    • atchman

      I really have to agree, the real reason for the rise in Dublin is the lack of ordinary family homes. During the boom, they built tonnes of crappy apartments with the idea that people never grew beyond 25 years and would never have kids or was it just pure greed? Either way that’s the primary driver of property prices in Dublin (especially along the Dart line). Another highly correlated factor is Dublin still boasts stronger employment due to the number of US corporations head quartered here allowing for better ‘job mobility’ something not present in rural Ireland.

      • Joe R

        Re; apartments – it was greed mainly, driven by endless tax incentives and a planning system run by individuals with no idea of what is required to make apartments and apartment blocks and city streets which are suitable for family life. i .e. they had no education and minimal interest and respect for the role of design. It is a bit better now.

        Dublin between 1994-2008 pretty much failed to build sizable family apartments like you can find in pretty much any continental European city. This could well be a very serious problem in the future when these units deteriorate and property prices remain low. Land law as it stands is is a big problem. Some blocks could become the tenements of the future.

        • Pauldiv

          It is stupidity and corruption.

          Well designed towns make functional and aesthetic sense whereas corrupt towns are a mess.

          What you are seeing is the drug infested slums of the future. No go areas.

  4. michaelcoughlan

    Good morning,

    I liked this article as it is well written and articulate. Id like, respectfully to extrapolate from the following “Housing wealth doesn’t come from talent, innovation or creativity but rather the feudal concept of location”

    There are a couple of observations I’d like to add. Your point re wealth isn’t created flipping houses is most accurate. Wealth
    Most certainly IS created building them. Furthermore if the house is well built it should be capable of being passed down the generations adding to the wealth of the decendants.

    The point regarding feudalism isn’t well made. It isn’t location that contributed to the wealth of the sovereign it’s the fact that the sovereign owns all the assets AND was able to set the rent at a level he choose usually to pay for wasteful wars etc.

    One other observation David; considering the fact that so much of the worlds financial system is controlled by sociopaths like the ones recently exposed don’t you think it’s time for commentators of substance like you to offer guidance on where funding can be sourced in a way which achieves your goal which I subscribe to of placing capital in the hands of wealth creators instead of feudal serfs ( Anglo lending to all the cowboys in town) such as crowd funding for example:

    • Pauldiv

      For me the thrust of the article is more about community Michael rather than private wealth. There are many ways of measuring inequality and housing is just one of them.

      Food price inflation is far more urgent than house prices because this affects us all. People are rioting over it and still we hear people here obsessing over property prices.

      Hundreds of thousands in Ireland are worse than poor and still they are obsessed with private property. It’s like a mental illness.

      The education system and our cultural values turn out servile people who have been educated for a non existent job market. They have no imagination and can’t innovate so what do they do?

      They get into property and flip houses like commodities traders.

      We need to get people back to work and this is why in the last article I talked about social housing. Well built social housing could provide the state with income for a century. Real wealth but shared wealth. The house in Glasgow I grew up in was built in 1919 and it is still solid and desirable today!

      Pusckin makes excellent points below about Irish Industry and this is what we need to focus on. Gurdiev made the point the other day that people need to expand their minds far beyond that of the small time hustler.

      Communities are not built by hustlers. They are created with the drive of men and women with altruistic vision and energy

  5. Puschkin the Black and White Cat

    David, I believe you may have missed the very point in your (as always very readable and enjoyable) article. The point is, Ireland is an almost non-industrialised nation, with little industry of any kind. We fool ourselves about “hi-tec” and the likes, but I, having worked in “hi-tec” for 32 years can say that it’s non-existent, basically a few multinationals with very tenuous (some even questionable) links with the country.

    Given that we have no industry, it seem logical to me that the “boyos” will put their money into property “again” as they simply are not able to perceive anywhere else to put it.

    I have spent time in Germany, I have visited small towns similar in size to Duleek, Maynooth, Urlingford or Athenry. In these towns they had “industry”, their industrial estates weren’t a load of “sheds” importing materials from abroad (which is what you see here), they had real manufacturing of complex industrial products.

    We must play the hand we’re dealt and not fool ourselves.

    • Original-Ed

      You’re spot on – the “boyos” have no option but to put it into property – like agriculture, industry is an embedded way of life and Ireland has ever only had very limited experience in it.

      The professions and property are the only games around and don’t expect any change soon.

      The absence of a post code is a real telltale – oh we’ve can’t have that , it would affect property values – let the exporters with their primitive addresses go jump, our property values are far more important than that grubby lot.

      Remember at school, industry is only for those who won’t learn their lessons and that’s hub of our problems. We’re condemned to being a service nation with a bit of agriculture thrown in. Bouncing along the bottom is all we can realistically achieve ( the cake will always remain the same size) – gouging is the only way up for the professions and in turn, the “boyos” can only gain on the back of it through speculation.

      The Irish are not begrudges for nothing – as is the case now , your gain is my loss.

    • Deco

      “We must play the hand we’re dealt and not fool ourselves”.

      +1.

      Unfortunately, we have a government that regards “booming house prices” as an ecnomic priority, and there is this inane assumption that it will have to start in South Dublin, and thereby it will counfound the critics.

      In other words the misallocation of resources to the real estate ponzi scheme continues. But this time the regime wants to acheive manage how the participants think about the whole market also.

      Now it is one thing to have a market that is being overtly manipulted, with ECB interest rates at Ponzi-supportive levels, NAMA, state owned banks, and ponzi financing. But it is something entirely worse, to hae the people charged for such deceit via the Welfare state’s income and health taxes.

      And then it is something entirely worse again to have stupidty back in force as a growing phenomenon in the public behaviour.

      In fact the establishment of this countr would prefer if the populace were all bonkers.

      • Pauldiv

        The mis-allocation of resources is criminal and this obsession with house prices is frankly offensive.

        It is offensive because it insults the intelligence and reminds us of the warped and truly screwed up priorities of this country.

        Here is beauty. Max Keiser laying it on the line to Paul Sommerville. He has massive respect for the Irish Brothers:

        http://rt.com/shows/keiser-report/episode-466-max-keiser-651/

    • lff12

      Nail on head there, a large part of the problem with the lack of investment is because there is little industry to invest in, but it doesn’t help that native businesses are squeezed out by subsidised foreign competition (eg native PC industry was entirely wiped out by Gateway and Dell) and high land/building/rent costs make setting up complex industry unattractive.

    • Pauldiv

      Excellent points.
      The boyos need a cold shower

    • Paul1000

      Well said!!!
      What about getting our sugar industry up and running again? I believe that the EU have agreed to partly fund it on the condition of some of the funding comes from the farmers who got large payouts when it was shut down.
      Why aren’t politicians jumping up and down trying to get the funding for this? Instead of chasing already besieged home-owners for property tax, why not help them help themselves by creating employment and increasing exports?

  6. Harper66

    “We must play the hand we’re dealt and not fool ourselves”
    Good post.

    In Ireland the system we have at present in unsustainable.

    Over regulation is killing small business. Two examples – the revaluation of commercial rates underway at present is increasing the costs for small business in some cases by 50 – 200%. There is very little being said about this but I see a meltdown in this sector come the new year.

    Not only are small businesses being asked to meet these impossible costs when business is at an all time low but they are also being caught with training, Health and safety costs etc. The only ones to benefit from the raft of new rates, and costs are of course the elites…local government, national government and the training providers whom by and large are private providers who have strong ties to whichever party is in power at any given time. It is no longer viable to run a small business in this country.

    Suppliers are holding no stock and any stock they do have is impossible to access as delivery costs are through the roof and customer demand is so low that most orders do not meet the minimum criteria for getting it delivered.

    There is a lot of talk encouraging enterprise from the current shower of shites in the Dail but the truth is becoming almost impossible to set up because you are hammered with same costs I have outlined above.

    Ironically, the other affliction for this country is a complete lack of regulation once you go past the level of average citizen and into the next level, that of the insider. Look at the behaviour of the banks and our present governments reactions to see evidence of this. Kenny and Noonans reaction to the Anglo tapes still angers and disgusts me in equal measure. They have sent a message to the world that nothing has changed here.

    The country is in melt down and a true picture of Ireland under this administration and the last is beginning to emerge to world. I was sent a link by a pal of mine to an article in a German magazine which described (I paraphrase) Ireland a place that has changed little in since 2008 saying it is still in grip of small elite who govern it for their own benefit. How true.

    But this is as I said unsustainable. The snake will eat its tail. The money has run out. How will people support local business, get food, pay for a roof over their head, put diesel in the car to get to work and still find the money for property taxes, water taxes, car tax, NCT income tax, VAT ?

    The next couple of years are going to be dreadful.

    • ps200306

      Why are people only getting this now? From 2000 to 2007 government revenue was massively sourced from property transaction taxes and property-related VAT, money that was borrowed (not earned) by the Irish public. A third of all government revenue came from those sources, and with that borrowed “windfall” the government doubled expenditure on public service pay and social welfare benefits. For over five years now, the revenue side has collapsed but the spending side is almost unchanged, even now being funded by a billion a month in new government borrowings. This is the simple truth that for some reason the Irish are refusing to see. We have massively overspent, using the future to pay for the present, and our chickens are about to come home to roost. (I say “about to” because we have made almost none of the required adjustment in current expenditure yet — you ain’t seen nuthin’ yet).

    • joe hack

      @Happer66

      I here what say;

      However having an so called open economy means most retail shops import goods to sell this in turn exports money out of Ireland most retail shops cause net lost to Irelands wealth and the money dies -is not recycle – Ireland becomes poorer as a result.

      For this reason the governments of most countries sponsor export businesses the doors are always open in this department -this makes logical sense – an important points that David does not write about when debating your topic above.

      • joe hack

        ‘I hear what you say’

      • hibernian56

        Tesco’s refer to Ireland as “Treasure Island”

        I personally don’t shop there, but it’s hard to resist when they are undercutting everyone. The latest I heard is they are doing a lunch deal for €3, that a samba, drink and piece of fruit or a chocolate bar.

        I ask the question, how is a supermarket allowed to sell prepared take away food for consumption. The “planners” always actively attempt to close a restaurant if they try to have a take away element. Unless they play the game an make a planning application, pay fees and inevitably increase their rates.

        • Joe R

          Fill out a form send it into Building Control and find out.

        • lff12

          In fairness, the Irish owned retailer that never stops bleating about how wonderful it is gouges suppliers, consumers and retailers alike by slapping a 15% charge on their accounts just for the pleasure of doing business with them. Tesco are minnows compared to some of the native vultures …

    • Puschkin the Black and White Cat

      +1

    • Pauldiv

      Agree

      This reinforces the message from Max Keiser where he absolutely ripped the shite out of the Irish. He’s got the picture alright and he tells it beautifully.

  7. 5Fingers

    Puschkin & Harper etc, you have hit it spot on. The play with property is no more than the rearrangement of chairs on the Titanic. They too will collapse in value soon enough. It is all built on sand.

    Back in the 70s as I was in secondary school and then finishing off college, there was a feeling of growing industry. There was welders, mechanics, repair shops etc you name it and when you went into Easons, you could but a mag to build your radio, new fangled 4 and 8 bit computer etc. I can remember the smell of bakalite as yet another cct board would catch fire…wonderful! Of course we have grown out of all that now and the usual blather. But I still only need to walk around Stuttgart, New Delhi and Sao Paulo….it all comes rushing back. No one in Ireland is getting their hands dirty anymore. It has been regulated out of existence – and our Public Service seem to be the best of zealots for the EU in ensuring it. And nuff said about the banking sector.

    Having reared the brats, next plans are to leave this sinking ship. If you have any skills…leave. Do not bother voting or participating or engaging. You will only be ripped off and made a fool. A lot of my cronies who are similarly educated and trained are of the same mindset. It is already happening…just watch the car sales, the sense of wanting to renew and rebuild…it is just not there.

    The only thing that’ll sort this place out is a radical political overhaul. Maybe the banks and Anglo did us a favor – they called our bluff as a nation.

    • joe hack

      Thanks for the laugh “I can remember the smell of Bakelite as yet another cct board would catch fire…wonderful! “ They do that in Cuba with cars, way to go…

      I remember waking home from town and a mate stopped me on the road and asked me for a lone of a soldering Iron I had just been in town and I pulled one out of my pocket a brand new Innovation a portable gas soldering iron funny -£20 a big expense at the time ….
      McEvers, Peats, Radionics, for your Op Amps, 555 timers, diodes IN4001… Transistors BC327 … BC547….. It’s sad to say but we copied designs this was not innovation it made money for magazines but it was fun.

      • 5Fingers

        Yes it was fun. But the the more you played with this stuff the more it informs the mind and that of a community it of manages to spread. It never did spread in Ireland and more is the pity.

      • Original-Ed

        Don’t know about hobby cct boards made from bakelite – the majority were and still are made from srbp – synthetic resin bonded paper – fibre resin was too expensive.

        Bakelite cabinets were used back in the valve age and yes the smell from them was similar.

        • joe hack

          The Bakelite fingers may be referring to is on the casing electronic components some may have been Bakelite but most are some from of plastic, metals or glass i would imagine his referring to the similar smell one gets when the handle of pot is burned over gas stove….?

      • Pauldiv

        Ah the IN4001 general purpose diode.
        Was obsessed with 555 timers and capacitors.
        Used to build radio circuits that were tuned with a variable resistor and a small screwdriver. Wired up an earpiece to the board and could hear stations from around the globe. It was great being a boy in the 70s and we were curious and inventive

        In those days Radionics was called Radio Spares and I used them for all my kit when I was in college and later in my electronics career

        Today you can buy complete systems on a chip and program them via a USB port. Think I will look up Radionics and see what kits they have. I’ve been thinking about it for a while and have not done electronics for years but if I get into it again I will be looking at it from a fresh viewpoint

        There are bound to opportunities for product innovation.

    • Puschkin the Black and White Cat

      +1 , I totally agree. Back in 2008 I predicted that the depression would follow the reccession and begin JUNE 2013, I hoped it was just bar-room talk, but as terrible as it may seem I think I am right.

      Ireland is like Wile E Coyote in one of his free fall stunts, nothing only a hard crash coming.

    • hibernian56

      I unfortunately agree, it’s simply too hard to start anything in this shite hole. The red tape is unreal. I registered a company recently and got a demand for VAT “on account”, can you believe that? Demand dully, scanned and shredded.

      The civil service have this dump locked down, the diversionary tactics of the abortion fiasco is a classic example of smoke and mirrors.

      The property tax is the civil servants way of saying, “go off the grid, we’ll still tax you”.

      The Energy Regulator is only there to ensure the profitability of ESB & Bord Gais, in order that the pay, pensions and perks are taken care of.

      The water tax is a forthcoming feeding frenzy a la ESB, Bord Gais, Eircom etc. Public service obligation my arse. I note that good old Johnny Mullins has moved from Bord Gais to CEO of Cork Port, was that job advertised? Has he prior experience of running a port, transport, logistics? Oh yes, sorry, he was president of Young Fine Geal.

    • Deco

      +1.

      The authorities have a suspicion concerning anybody who gets their hands dirty. It is like as if they are suitable for scelping. Small people are not allowed rise above their current level.

      On the other hand, the authorities give bail outs to bankers, speculators, and the already wealthy. Especially when they have no clue what they are doing.

      The entire system is now regulating inequality. In fact, it is being rigidly enforced.

      It is all a load of nonsense.

      • Original-Ed

        What can you expect – they’re public servants and even the politicians overseeing them were public servants themselves at one point. The loop is closed and there’s no escape.

  8. Harper66

    Good post. Agree.

    “The only thing that’ll sort this place out is a radical political overhaul.”
    +1

    • DB4545

      This fixation with bricks and mortar needs to be kicked to touch fast. At the height of the boom the average build cost for a 3 bedroom semi-D was approx 70,000 Euros and that was with the cost of paying for builders driving land cruisers. It also includes “decklanding” it and a bit of marble island countertop. Every other cost is spin,property porn and land baron politics. The “investment” in bricks and mortar takes money out of R & D in emerging technologies and education. This “investment” is purely a vehicle for a shakedown of resources from the working population and into the hands of these land barons and their political fixers getting a “dig out”.

  9. joe hack

    Good stuff David;

    How does one change the location value of property?…
    Equality tends to be more likely in smaller states, however with EU/USA trade talks due to start next week Ireland is fast become part of a large state.

    I expect we will lose our draw for the data companies which mainly locate here because of the stable cool climate and also the fact that Ireland earthquake free. ‘The double Irish’ has less of an effect than you might think.

    However a central location in mainland Europe makes more sense for telecommunication reason and the cost of placing data storage underground may be more sense in the likes of Lyon for example even with the cost of expensive cooling systems and associated headaches – technology is moving fast in this area.

    The rich tend not to be innovators – the hunger is not there, this makes your above article all the more relevant particular in the Irish context but as I have mention before the Irish don’t believe in themselves – they don’t stay to protest – they go for the money somewhere else after the taxpayer has educated them -In this context Irelands lack of nationalism has lost us our innovators and young protesters and we are in the protesting high season.

    A global economy will not suit this land long term Ireland needs an Irish economy of its own whether poor and well-fed or rich and well-fed that is not so much an issue.
    Ireland is heading into to a global economy blindfolded and wishful hoping won’t do for us, we are been told what opinions we should have, we will be swallowed up.

    The lack of national self pride been demonstrated in the Snowden affair most people agree with whistle blowing but few dare upset the bullies in the classroom – we are been told – we have seen the results of this in the banking system.

  10. Deco

    Ever get the sense that there is simple too much BS coming from official statistics. In particular with reference to the inflation rate.

    The food inflation rate is way higher than the rest of inflation. Even though food, and fuel should be the two items that are essential to the construction of the inflation rate.

    Is the official inflation rate a load of baloney ? Sounds to me like as if this is exactly the case.

    • Joe R

      “Ever get the sense that there is simple too much BS coming from official statistics. In particular with reference to the inflation rate.´´

      You are bang-on here, recently. One qualification it is the headline writers that are trying to pull a positive story out when you look at the data, it usually stinks.

      There is the smell od propaganda in the air though…

  11. Deco

    There is something desperately out of sync with the South Dublin economy, when real estate valuations are still clueless with respect to the rate of return, while the main street of Dun Laoghaire lies like a ghost town.

    It seems that the money is now being misdirected once again into yet another ponzi racket for real estate.

    There is no economic activity. Just speculation.

    The whole thing is just bonkers.

    • hibernian56

      Ain’t no recession in RTE, is that were they all live?

      • Deco

        No recession in RTE.

        Montrose Millionaires blowing millions like a shower of bankers. Lousy investments. A fool and their money, easily parted.

        Only the fool is us. Because we pay the stupid tax for this joke quango. Sell it, and be done with it.

    • 5Fingers

      The reason is simple. But it is bonkers.

      You have a job, you are in the civil service in the senior level or work for a multinational or a bank or are a professional with well proven income…loan no problem. Bet if you saw who’s buying the 131 and 132 (vomit inducing cheek of the reason behind these numbers) registered cars, it would be the same profile. These folks contribute not one whit to mainstreet shops. These people are weekend mall trawlers or out of town restaurant/ coffee shop sniffers. Nine to Fivers workers and afternoon evening quaffers of the latest boutique wine offerings in nice little places like Greystones/ Malahide etc.

      None of the above are trades people or business owners. These guys are now working in the black market outside the pale. Cash business is the only way to survive. The real lifeblood has gone underground.

      Here’s a dream…. No one should be allowed be in Cabinet, let alone the Dail unless 5 years running a business.

    • Deco

      Of course….how could I possibly not see the obvious.

      All of this madness is the result of state policy, and EU policy.

      The Ponzi suburban real estate racket is now more important than the economy.

      It is all “bonkers”. The policy framework is completely mad.

    • Joe R

      Deco,

      I put up a sizable post in response your similar comment about Dun Laoghaire after the last D McW article here. Perhaps you haven´t seen it? Perhaps it is worth a look for you. It may help you find an answer to what you are repeatedly asking here on these forums.

      In it, I mentioned Carrickmines as one development in particular which has detracted from Dun Laoghaire´s development – please see this from today;

      http://www.independent.ie/irish-news/courts/corrupt-payments-trial-relating-to-carrickmines-lands-opens-29395260.html

      On the subject of a new property bubble if take a look at the Daft report mentioned in D McW article property is tanking across the board all over the country. There is no real bubble. All that is up is ASKING PRICES in three areas. This is the opening bid in a game of haggle, not real money being paid over. One of those areas South County Dublin which is up 12% has the the most outrageously priced property in the country so it is not a reliable barometer of anything outside of that region.

      Report is here; http://www.daft.ie/report/

      • 5Fingers

        Looking at MyHome.ie…looking at D4…Minus 5% across the board.

        • Joe R

          Exactly.

          There has been a small up turn in one set of numbers which has been probably prompted by auctioneers whispering in sellers ears.

          Mortgage lending and stamp duty will reveal the real story at the end of the year.

      • Deco

        I did not get to read you comment the last day. But I am using it as a direct example of the sort of stupidity that is now prevalent in the low interest rate, taxmoney being used to prop up suburban real estate values, and keep everybody lulled into a false sense of security.

        The town of Dun Laoghaire has gone down, whilst in parallel the government of Dun Laoghaire has gone up. The worst thing to ever happen to DL was the creation of a local political layer to suck business out of existence. It is a place where the local stupidity is highly effective at making the place a mess. Flawed concepts about economics are driving out economic activity, and all that the state bureacracy idiots can think about is….even more flawed concepts and the search for a new collection of suckers to prop up the mess.

        David – if you want to save Dun Laoghaire, organize a rates strike. Of course, on that joke of a television station, there will immediately be a spokesman for DLRCC telling the nation that the rates strike is irresponsible because “the council” have extremely important services to provide.

        Yep. That’s right. They have to pay for somebody’s master’s degree. And the odd junket. Plus handy jobs for political canvassers.

        Time to tear down the institutional state, and rebuild it all over again. It is far too complex, and totally unaccountable. The only objectives it seems to fulfil are to provide income streams for political cronies, and to eliminate small businesses.

        It is the ultimate Insider versus Outside scam operating in today’s Ireland.

      • Pauldiv

        +1

        This makes far more sense than the spin put on it by our not at the races media. It’s so obvious and pierces the bs bubble rather nicely

        This comment should be ‘+1 abble’ and sent to the top of the page.

  12. Adelaide

    Ironic: Is anyone familiar with the Freeman-on-the-Land conspiracy? Although it is complete fiction and paranoia it is rather appealing in certain aspects. It claims that by registering your child for a ‘Birth Certificate’ you are in reality incorporating a commercial ‘artificial entity/person/company’ for a lifetime of ‘legalised’ financial swindle by the for-profit private company Law Society and it hired guns and kangaroo courts. Know the truth and all fines, charges, taxes and every unlawful ‘legal’ money fraud become water off a duck’s back.

    Anyway. Under the conspiracy all ‘registered’ children become ‘wards of the state for life’ and thus the fraudulent Law Society FORMALLY treats adults as ‘children of the court’. To disentangle yourself from this ruse one simply has to distinguish in court your true self ‘natural person’ as opposed to your strawman company name on your birth certificate.

    I like their idea that the State formally & legally treats its citizenry as children. And that the citizenry present themselves as children. How ironic that a conspiracy accurately describes our present day reality. Our fellow citizens have delegated so many aspects of their lives to third parties that they have become in my view infantilised.

    • Deco

      The state has been treating citizens in a patronizing manner for decades. In fact some time after independence it decided to going back to the way that Dublin Castle operated under British rule.

      In fact this approach to patronizing the citizens, and treating them as children, is perfect for the latest imperial project that the local gombeens who seek to screw the rest of us, are now continually dragging us into.

      er….on that note…”Happy US Indepedence Day”.

      (when a bunch of people who could take it no more decided to draw up a document indicating that they had enough of the subservience and the gombeenism that existed here at the time, and which in many ways is now increasing again).

      • Irish PI

        Ironic that appx 2/3rd of the signitories of that document were Irish or of Irish decent.Not to mind they were rather annoyed that they were supporting a King who was[1] insane [2] firttering away their monies on wars and taxing them both on import and export from the USA .
        The thing is as a Drill instructor in the US Marine Corps said to me on a training exercise.”Y’all aint hurtin enough!If you think you are hurtin NOW,wait till you get used to this amount of hurt ,then when you are finished.You will consider this hurt an easy time.!” Simply put,Its going to get alot worse ladies…And get worried if the food prices start to rise.That will have a knockon to the cheap fodder most Irish fammlies of Deckland and Dolesville are subsisting on.

        If I were you ,I’d be figuring out how to start raising a small urban garden and how to scrounge foodstuff off the wilds.It might be a good idea too to start trading in any Gold for canned food and shotguns.At least you might get to keep your gold ,food and shotgun if you have the last.
        BTW the great Irish Gold scam David,thats another article you should consider.
        We have to start decoupling from Irish society as much as possible,and start changing it from the inside out.
        BTW onto The Good Room” now. Saying it as it is…BTW David,do you have these books on the European market yet?I’d like to give these to my German relatives.Although they speak English they prefer to read in German and it would be nice to get the average German merchant middle class a chance to read these??
        Also ,one thing that has struck me on the Irish German thing from your books.As you said Germany is dying and its birth rate is falling.We have a young ,talented workforce.Logic would suggest that the Germans should be looking for Paddy to fill the middle management and production line overseer….Anyone noticed many German industry jobs advertised over here??

        Happy Independance day Y’all!

    • Joe R

      I get your drift.

      Common law is largely derived from 12th century English feudal law – you know where the King owned all the land in the realm and the Lords basically owned all the Serfs – it has just been updated here and there a wee bit over the years. A constitution and some rights got overlaid, too. But the basic feudal concepts/viewpoints are still in there.

      Plus the Law at the highest level here is still controlled by a select inbred group of conservative rich people. So it will never change.

      It all needs to be re-written. Particularly land law. The law that Ireland now has is hopelessly inadequate for the computerized, industrialized world that exists now.

  13. Hi David,

    I do wonder how these things are measured (inequality). Empirical observation I know, but I can remember growing up with kids who were wealthier, and kids who were clearly not well off, but on average, we were all skint compared to how things are now. But I guess its all about opportunities, right?

  14. bonbon

    “Property Bubble”, again? Ok DMcW, all bubbles are fed by cheap credit, so where is it coming from? It is very odd indeed to hear this West Brit appeal to Moral Sentiments, straight from British East India Company chairman Adam Smith. It is amazing the grip it has on West Brit’s (at least).

    Let’s have a little look at Adam Smith’s decree to subjects, shall we?

    “To man is allotted a much humbler department …. Nature has directed us to the greater part of these by original and immediate instincts. Hunger, thirst,the passion which unites the two sexes, the love of pleasure,and the dread of pain, prompt us to apply those means for their own sakes, and without any consideration of their tendency to those beneficent ends which the great Director of nature intended to produce by them.”

    —Adam Smith Theory of Moral Sentiments —1759

    Now instead of the Sentiments for Subjects, why not let us deal with the real cause of bubbles, and avoid the pusillanimosity so popular with subjects of the global empah. Consideration of the purpose of another “bubble” is rather urgent, would’nt you say?

    And actually I think this comment from Vincent Browne :

    “Almost certainly the reason Brian Cowen and Brian Lenihan capitulated to pressure from the banking world on September 30th, 2008, was not because they were corrupt, nor because of any golden crony circle, but because they were in awe of the power of high finance and feared that if high finance were challenged it would be catastrophic for the nation.”

    shows the Adam Smith Decree at work. Are some here captivated, bedazzled with such awe, and resort to Moral Sentiments for the poor, indebted, bewildered and confused?

    • joe hack

      Deference:

      Humble to the gods(banks) or to group think like Reinhart-Rogoff – Pro-Austerity … like those who quote their idols without question those blindly follow Obama Adam Smith etc.. whistle blowers need to be protected not pillared

  15. joe hack

    Platos Republic

    WHY?

    • DB4545

      Liam We lack a sense of outrage. It’s no accident that we’ve been governed by others for much of our history. As Joyce said we are the old sow who eats her farrow.

      • I’d say what people lack is hope. The people protesting in other countries are fundamentally optimistic, they believe that change is possible.

        • Pauldiv

          You are wrong liam because I have not lost hope.

          I did once but today I feel empowered. I feel empowered because the mask has slipped and everyone knows it and no-one can deny that Ireland has to change. If they refuse to hear them we need shout louder!

          I feel empowered knowing that there are people out there protesting all over the world and now here in Ireland. The Irish Govt know their game is up and that we have called their bluff.

          A very bright light has been shone into this dark part of Europe and Mr Q did us a favour. We have plunged the depths of respectability and we start rebuilding now. Today.

          The slob in the funny photo is not typical of Ireland at all but people are laughing at us. Do you want to be laughed at?

          A clear long term plan is needed because that is the only thing that will persuade us that Ireland is determined to shake off it’s gombeen image and give it’s people a stake in a fair, civilised society

          Change has to come and it will come.

          Keep the Faith

      • 5Fingers

        It’s all down to flouride in the water. A key component of Prozac and it keeps you calm. We are a somatised and calm society. Get back to sleep!!

  16. This article is utter utter tripe – written by somebody who doesn’t seem to know if they are coming or going.
    Either you embrace wealth – and the opportunities to create it (in a sustainable way) – and the benefits that brings to Society – or else you you embark on some kind of Karl Marx ideology – where we can all live in a grand commune – and become even more depressed than we are already.
    Capitalism is a bitch – and isn’t for everyone – but its the best shot developed countries have to sustain a working life model.

    Philip

    PS the main reason why Dublin (SOuth) prices are rising is because there are very few houses on the market – there is a strong rental market (in my opinion too strong) – which gives the opportunity to take out a loan from the Bank (who are lending) – and where have we heard that before!

    • So, what is proposed here is that, while acknowledging that ‘Society’ is real, opportunities, and sustainability are important, we should fully embrace Capitalism because anything else is a Marxist fantasy.

      That’s simply a false dichotomy. Every successful economy uses a blend of ideas, nowhere are things as black and white as you suggest, in my view.

      In practical terms, there is zero wealth generation and precious little in the way of opportunities created by buying and selling houses to each other, I would have though the recent history of Ireland demonstrates that rather well.

      There is nothing magic about the success of other European economies, they simply appreciate the value and power of capital and wealth because they have had to build it the hard way, from first principles, where as in Ireland we have a pass-maths political class that has no concept of value creation. And certainly no idea of what kind of society they want to create.

      • Liam

        I am saying that a successfully functioning economy should have a sustainably strong housing market – to reflect the strength of the economy. I am also saying that I believe wealth creation and preservation gives the best backdrop to achieving a “successful” economy. I am absolutely NOT saying that you should be using the housing market as an economic driver – a fatal mistake that “the West” embarked on over the last decade or so (particularly in Ireland’s case) – while it shifted its manufacturing base (i.e. the wealth creation and preservation that goes with manufacturing) to the Far East.

        Ireland – Ireland failed as a functioning entity when it had to call in the IMF in 2010 – i.e. 90 years of failed government and Society came to a head.

        Why – because there has always been a substantial minority across all walks of life (particularly professional / business class) whose philosophy is to screw the punter; the tax man; and anyone else worth screwing (the term horse trader comes to mind – we are a nation of horse-traders). All this has been facilitated by the Irish electorate – who have always voted nearly on mass for what they can get…. which is why Fianna Fail has held the reins of power for most of those 90 years.

        I would love to know – speaking of dichotomy – what are your “first principles” in building the dream Society…..

        Philip

  17. PhilRuss1

    Utter tripe?

    Now that’s interesting because when you look at the richest countries in Europe they are also the most equal. The Scandinavian and German people embrace wealth but they know where it comes from. It come from productivity which is a reflection of human capital and capital deployed in any enterprise, plus organisational efficiency. All these surpluses are made more permanent if all the people of the country have a chance to participate.

    …and mass participation? well that comes from mass oppoprtunity, which is again a function of equality.

    Now can you tell me where the tripe is because your comments seem to me to be more tripe less onions!

    Best
    David

    • Nice to see you read your Blog!

      I think an hundred year analysis of Germany (1913 on) might shed some light on German efficiency particularly with regard to “human capital”. Exploitation of the weaker EU countries most recently (Bondholders in our own case). Post WW2 Germany was the economic victor (via the USA) while GB was the loser (also via the USA).

      Scandinavian Wealth – Norway entirely oil based; Sweden – was always an enlightened Society (managed to stay neutral in WW2 – always good for the balance sheet!). Finland – i don’t know how; and Denmark – attached to the European mainland.

      USA – they work hard; there are masses of opportunities; which gives the “masses” the opportunity to work (notwithstanding the “West’s” reckless export of manufacturing jobs to the Far East). The USA has a massively strong, but unequal, property market (not withstanding the Bubble of the late naughties) – which reflects its ethos of hard work. The USA embraces Wealth – both creation of; and preservation of. And remains the richest Country in the World.

      I think you are arguing against capitalism a la USA – but promoting a socialist capitalism a la Scandinavia. My read is that Europe is not in a good place at the moment – whereas USA seems on some kind of road to recovery.

      Anyway the few onions I grow on my veg patch (started in 2009 when I thought society, as we knew it, had ended) need watering (shame it looks as if I am going to have to pay for it…)

      Here’s to sunny days

      Regards

      Philip

      • Wills

        Meh!

        David won that exchange hands down.

      • Irish PI

        Sweden – was always an enlightened Society (managed to stay neutral in WW2 – always good for the balance sheet!).

        Not as neutral and clean as made out.It made a fortune supplying high precision ball bearings to both Axis and Allies in ww2.

    • joe hack

      David, Well Holy God! This is a first for me as I am agreeing with you 99.9% I am just keeping a little bit in reserve – .1% for later…

    • michaelcoughlan

      You forgot to point out to him also that we don’t really have capitalism here rather a kleptocracy, Or in the UK (mostly services, hopelessly in debt) or USA (outsourced militarised paper economy AND hopelessly in debt) and the whole world subjuicated to the whims of the trans national hedgefunds!

  18. So Sth Dublin is the Beverly Hills of Eire. No breaking news there.

    What this property bubble has compared to the last is that as property prices rise by 12 per cent in South County Dublin (or anywhere), so too does property TAX rise by 12 per cent.

  19. paddythepig

    http://www.thepropertypin.com/viewtopic.php?f=10&t=59810

    Those yahoos disrupting the allsop auction are getting the ridicule they deserve.

  20. TrackerMan

    With US economy beginning to rumble again, self sustaining growth beggining to return and while I admit it is still at an early stage, given the supports still in place, it is much further along than in Europe, which is two years behind at best I think. Traditionally the combo of weak euro currency and strong US economy has been good for Ireland, $/€ moving towards 1.20 would be a big boost to us here in terms of US multinationals – just look at the 1995 to 2001/02 period, when we grew the economy based primarily on productivity and not credit. Credit will be restored if productivity picks up, confidence will pick up and unemployment will fall. It is difficult to see this right now, but if a sustainable long run funding solution can be put in place for our banks – I beleive Ireland could begin to grow again.

    • joe hack

      USA Debt To GDP 105% and rising Ireland’s is 117% only about 5 country are worse Japan, Greece, Zimbabwe, Jamaica, Portugal these country are in debt they are not rich. Fiat money is not sustainable and cannot logical work. you are not rich if you have 16 trillion in your pocket and you own 16 trillion and 1…

      They are living beyond there means future debt on the unborn needs to be stopped growth is an illusion the duty of a society is to look after all of it’s people…

      The average Debt to GDP is 56% Russia is about 8% Saudi Arabia 3.4 Afghanistan 8…

      USA has rating of AA++ Ireland is BBB+ this only make sense because the USA can print money and has big gun – the bully is a pivoting to china

      • TrackerMan

        Debt to GDP is one of many measues to assess the creditwortiness of a country and while it is a very important figure and must not meaningfully go over 120%, the ability of a country to service this debt is of greater importance. THE US is the worlds key reserve currency, it is politically stable and has well established governance standards. Furthermore it is a high income nation (average GDP per capita of $49k), highly diversified in terms of product & service output, market orientated, with an adaptable and resilient economic structure, all of which contribute to its ultimate strong credit quality. Don’t get me wrong, it does face challenges ahead, but with world class educational institutions, a history of innovation and job creation and a renewed and expanding manufacturing base on the back of vast resources of shale gas – I wouldn’t be too woried about its medium term prospects!

    • StephenKenny

      The sustainability of the US growth is far from clear, but the 1995-2001 period may have been one of slower credit growth in Ireland, but in the US & UK credit was going to the moon – it was the days of the dotcoms.

      It ended with the stockmarkets, Enron, Worldcom and so on, crashing – and it was bailed out by the Greenspan Fed. Rates were slashed, and the seeds laid of the following credit and property boom, which ended in the 2007/8 crash.

      Today, we just have central banks working in lock-step, with the explicit, and oft stated, goal of creating the ‘wealth effect’ by pushing up stock markets and property prices.

      We’ve had little really sustainable growth since the 60s – that’s the sad truth of it. Every time you look at a business cycle since then, you see massive net debt somewhere.

      Trade the bubble anyway that appeals to you – don’t short the fed – but the rest is mere spin.

      • bonbon

        Very good!

        Only add the LTCM crash-precursor. The repeal of Glass-Steagall in 1999 opened the door to hyperbubbles, and hyper-crashes.

        All of this is “sad”, but we know what to do about it.

  21. OT:

    While I am certainly not a fan of the Irish Economy site, this is an excellent post by Kevin O’Rourke, who is more or less the only reason for me to scan this site once in a while:

    http://www.irisheconomy.ie/index.php/2013/07/05/why-economics-needs-economic-history/

    • Pauldiv

      Thanks Georg.

      Far better to be grounded and have a sense of history than feel disconnected.

    • bonbon

      I had a look, and the only bit of history mentioned, was Marx and Adam Smith. Nothing at all about Matthew and Henry Carey, Alexander Hamilton, and Friedrich List.

      For the real history of economics see :
      Friedrich List: Outlines of American Political Economy in Twelve Letters To Charles J. Ingersoll.

      Most have never heard of the American System, believe it to be today’s globalized mess. Even Marx had a problem, never mentioning it in his tomes, merely idolizing Smith.
      Marx attacked Carey’s program for national economic development as a regression from Adam Smith. He rejected Henry Carey’s attack on “the diabolical influence of England on the world market,” by claiming that it was simply, “the natural laws of capitalist production,” and attacked Carey’s plans for an alliance with Russia to defeat the British Empire by labeling him a “Russophile.”

      The Chinese Opium War for much more on Marx’s apologia for colonialism.

  22. Wills

    Okayso this South Dublin rise in property prices is an engineered event by NAMA.

    No mystery to it.

    Dissolve NAMA – end bank bailouts – free up market enterprise then you will get the equality.

  23. cjmurray

    Capitalism will destroy the planet. The planet is finite, but capitalism needs constant “growth” and is inherently incapable of even slowing consumption, never mind implementing the actual reductions necessary. Capitalism is an addict, in complete denial of the consequences of its behaviour. It has unfortunately had a fairly free run for decades, its tired, self-serving jargon and ideology are everywhere, and it has effectively brainwashed large chunks of public opinion. “Balance the books!” has become the blame-shifting war-cry of the capitalist elite and their fellow-travellers, as applied to public spending. Capitalist spending is sacrosanct of course, but the real omission is the environmental one – our environmental expenditure catastrophically outweighs our environmental saving.

    We need to explore and urgently begin to implement other solutions, based on equality and democracy and real feeling for nature and people, rather than on the insane worship of “growth”, technology and technical criteria. More co-ops, for example (http://en.wikipedia.org/wiki/Cooperative ). They’re not perfect either, but they can be made to work. The co-op members can decide remuneration, usually roughly a ten to one ratio between the boss and the floor-sweeper. Implement an agreed maximum income (See http://www.change.org/petitions/the-european-parliament-help-the-peoples-of-europe-to-introduce-a-maximum-income ). And, of course, we need to crush the power of the 1% or the 0.1%, or at least mention it now and again, rather than peddling barely-relevant twaddle about how “Ireland at the moment is far more equal than people sometimes think” on the basis of comparisons between the top and bottom 20%. The richest 300 people in Ireland have increased their already vast wealth by 30% since 2010, and it now stands at 66 billion. It’s bite the bullet once and for all, and tax the rich time!

    http://www.villagemagazine.ie/index.php/2012/11/inconveniently-for-you-evidence-shows-rich-already-squeezed/#comments

    • Wills

      What version of Capitalism are you writing on?

    • Unfortunately by the time you get around to taxing the rich – they will have gone. So will the 1 to 2 billion they contribute annually to the economy, as well as their 66 billion.

      • cjmurray

        Yes, I’ve heard this capital-flight guff from the crazy fascist Gurdgiev, who aids and abets and encourages capital flight by the rich while advocating 30% cuts in the incomes of the poor and middle-class. However, I’m not writing from some little Irelander perspective, in thrall to the blackmail of the rich. Tax the rich everywhere. Shut down the tax havens everywhere. Introduce capital controls everywhere. If the rich want to leave Ireland, good riddance – throw them into the sea. We’ve had enough of their precious “talent” and don’t want to subsidise the leeches anymore. Let’s see them try to smuggle their land and buildings out through Dublin Airport.

    • Pauldiv

      300 people hold 66 Bn?

      Answer me one question people.

      Is this right or is it plain wrong?

    • bonbon

      Steering clear of G.K. Chesterton communitarianism is a good idea. Have a look at Bare Knuckle Capitalism Right wing think tanks The Irish connection.

      The petition sites like “change” and “avaaz” sound like mass movements with millions of signatures, etc. Look up the wiki. Amnesty Int. pays Change.org. These sites are actually from the “rich”.

  24. Pauldiv

    A1 David.

    You hinted at feudal mentality. If we had a moratorium from rent seekers we could transform empty shops and turn arable land into local food sources but such initiatives would not rub well with the small landowner / landlord mentality. They come first.

    If retail outlets and commercial premises are lying rotting thanks to stupid feudal thinking then they could be acquired for people who want to have a go.

    The people who own such properties don’t care about the community. They are all about money. Gombeens. Nothing has changed.

    • Deco

      Business is being used as a host for a very parasitic and overly complex institutional state. Unless by business you mean those big enough to have real influence on matters.

      It semes that Ireland is now run by Gombeen-Marxism :

      “From each according to what can be sucked out of them, and to each according to their ability to shove their snout into the proceeds”.

      The economic disintegration that engulfed the West of Ireland, has appeared in Waterford, Dundalk, Letterkenny, Clonmel, and Limerick. Urban provincial Ireland is being sucked dry by a worst possible combination state power structure. What Professor Lee calls “the worst of both worlds”.

      And on top of this you have an imperial power structure from Brussels downwards, that is quite frankly, idiotic.

      • Pauldiv

        There is a blood sucking vampire draining the life out of the country and they would have our blood and our psyche if we offered it to them

        I want to live in a balanced civilised society that looks forward and innovates but I have come to the conclusion that nothing short of a revolution will achieve it

        People all over the world are protesting against the vampire and here in Ireland we have our very own vampire that needs a stake thrust into it’s cruel old rotten heart

        We are lorded over by idiots and an idiotic system

  25. DB4545

    Pauldiv, The Max Keiser clip referred to earlier was right on the money. Max Keiser spelled it out in not very polite language, the Irish State is being f**ked up the a** by crony capitalism. The game is rigged. Some years ago transnational bankers referred to the banking system here as the Wild West. Why? Because there was no sheriff in town. Regulation of the banking system was non-existent as we found out with Anglo which was a toxic hedge fund for these land barons.This cronyism is starting to manifest a mild boom (and another eventual bubble) to have some sort of feel good factor in place leading up to the next election. We just can’t afford to run with this bullshit again.

    We have a political class who “inherit” the “family” seat and exploit it shamelessly in a way that would embarrass the borgia popes. We had a drunken assh**e who inherited the seat from Daddy, had the decision making skills of a slug, was suckered by Drumm & Co. and helped bankrupt the State and is still pocketing 3000 a WEEK of our money. We replaced him with another gentleman who also inherited the seat from Daddy and regardless of what decision he makes will also trouser 3000 a WEEK of our money.
    We are supposed to be a republic but the constitutional monarchy of our neighbours is more accountable to it’s People(Jeffrey Archer got four years and their MP’s go to jail for fiddling expenses). We’re decent people and we have to shout STOP.

    • Pauldiv

      Agreed

      The Max Keiser clip was refreshing and the contrast between his vocabulary and Sommerville’s was startling. It should be interesting when Sean Quinn goes on his show because we will get another sharp icy blast of Keiser’s perception of corrupt Ireland. He was banned from Pravda RTE because he is too much for them and they don’t look too kindly on phrases like ‘leprechaun bankers’. It’s our loss if we can’t handle the truth and take a joke

      Our political class are stupid and as Sommerville says our populace is docile. We have the superficial democratic processes like all western nations do but we are at the mercy of an electorate who always votes against the best interests of the nation. That is not democracy. It is something else. Stupid people control the country and we all being held hostage to their myopic loyalties

      It is very hard to find people with a world view that stretches past the village speed sign but then again rural Ireland is not exactly a hot bed of thinkers

      Today there are 35,000 at an anti abortion rally and the media is already kite flying about the coming budget. The link below is about Labour protecting core social welfare payments but it is the comments below the article I find most interesting as the article seems to have gotten the attention of the nasty people

      You sense the bitterness in their hearts and it makes them sound like neanderthals. Me me me. I wish they would stop whineing little children and blaming everyone but themselves.

      Labour: €1bn bailout savings must protect welfare

      http://www.independent.ie/irish-news/politics/labour-1bn-bailout-savings-must-protect-welfare-29399441.html

  26. joe hack

    I found a fix to the Irish problem — it’s an Irish solution….

    We revert to kind – we become catholic – dump all forms of prophylactics….

    We make lots of baby’s and feed them with oaths we then we send them to college…we then export our products but this time we charge the non productive, non profligate countries for our exports —- a bail- a pension bail ….or are we already doing this for free….?

  27. SMOKEY

    Look it is all, give or take, more or less, playing out the way D-Mac said it would.
    The two tier thing was brought up by him numerous times over the years.
    The reason a place like San Francisco, a micro economy inside an even larger economy, the State of California, works is because of the availability of all kinds of jobs at all skill levels and even some crossover jobs that need several layers of skills, i.e. a janitor that owns the company, or a software developer that manages 6 others as well etc etc so his argument is fairly spot on but, the key ingredient is Govt. that makes it easy for employment creation, not a govt who trys to create employment. Im rambling. In short I more or less agree!!!

    • bonbon

      I’d watche the Smoke and Mirrors of the US B.L.S if I were you.

      LESS THAN HALF AMERICAN ADULTS HAVE FULLTIME JOBS

      JULY 6, (LPAC)–While the media has been hyping “good news” data from the Bureau of Labor Statistics, released last week, the same data reveals a much more bleak picture, one that is a much closer approximation of the Hell that a majority of American families are living through. The BLS data shows that among all civilian adults, only 47% currently have fulltime jobs. Already, nearly 20% of those Americans with jobs are only working parttime. Out of 144 million Americans counted as employed in June, only 116 million had fulltime jobs. When you look at the total civilian adult population of the U.S.–245 million men and women–only 47% had fulltime jobs.
      Furthermore, President Obama–“The One”–has set another milestone. Since his inauguration in January 2009, the country has gone through 54 consecutive months with official unemployment at or above 7.5%. This is the longest stretch since the BLS began compiling monthly data in 1948.

      And actually DMcW did mention the massive trend to non-full time jobs a week or two ago.

  28. bonbon

    The Milton Friedman wink-and-a-nudge from the Wall Street Journal :

    WALL STREET JOURNAL PRAYS FOR PINOCHET ON THE NILE. In its editorial coverage of the recent Egyptian events, the Wall Street Journal could not resist making a pitch for the Egyptian generals to retain power and mirror the Chilean coup of the 1970s.

    “Egyptians would be lucky if their new ruling generals turned out to be in the mold of Chile’s Augusto Pinochet, who took power amid chaos but hired free-market reformers and midwifed a transition to democracy.”

    How’s that for a clear message from the free, liberal, Chicago School, Milton Friedman economists? Pinochet the midwife?

    Most fail to notice that Morsi’s attempt to start a Sunni/Shiite worldwide religious war in a speech a couple of weeks ago is the reason things escalated. Britain’s Muslim Brotherhood is playing exactly the same games Britain played (plays) in Ireland.

  29. bonbon

    A rentier-financier oligarchy in Ireland, you might ask? Of course, and William of Orange brought that Venetian “tradition” when he invaded and slaughtered, sorry visited, England and Ireland. Since then the New Venice shows its masked snout in the same old ways.

  30. If you’re looking to prevent another housing bubble then simply prevent the banks from creating the nation’s money.

    As it stands when banks are deciding what project to create money for they are incentivised to create money for a project that involves a real world asset. Return to power to create money to the central bank, have banks just do banking and we’ll never have a housing bubble again.

    Positive Money in the UK have done some good research into the way house prices don’t conform to the laws of supply and demand.

    http://www.positivemoney.org/issues/house-prices/

    • bonbon

      You need to define “banking”. As you are surely well aware, with Ring Fencing, Likaanen Light, and other silly foot dragging efforts including the 20 years too-late “transaction tax”, this is THE issue.

      The only possible way for banks to to banking again is with Glass-Steagall, writing off the derivative overhang (Deutsche Bank now number one Casino world-wide). The obsession with “money” has blinded you to this :
      At $72.8 Trillion, Presenting The Bank With The Biggest Derivative Exposure In The World (Hint: Not JPMorgan)
      The numbers are stunning, not really money, but a catastrophic tension in the system. So even if you mention money, you will be blindsided!

      We not. This financial aggregate defines the entire EU politic right now.

      So back to normal banking, reconstructing the smashed economy with national credit systems, as defined by Alexander Hamilton and presented for today In 4 Phases

  31. uncle fester

    Dave
    You’re forgetting the the price rises are asking price rises only. Actual selling prices from the Property Price Register tell a different story with extremely low volumes and no significant changes to match the huge increase in asking prices that we’ve seen.

    Vendors have bought into the VI propaganda that the property market is back and have slapped 10% onto their asking prices. It doesn’t mean that they will get those increased asking prices.

    It’s a bull trap and will prove to be a lull in the storm.

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