August 1, 2013

Property porn doesn't float

Posted in Celtic Tiger · 161 comments ·
Share 

The property pornographers have been giddy this week over news that property prices have been rising. Reported sightings of a new breed of foreign property speculator in fancy Dublin restaurants, clinking flutes of champers over mega deals, have sent property hype merchants into a dizzy tizzy.

Will house prices now begin the long ascent to the lofty heights of 2006/7? Will bricks and mortar dramatically inflate some people’s wealth again? And for the average person in negative equity, will future price rises claw back some of the “wealth” that has been destroyed?

These are serious questions. Where are property prices likely to go in the future? With all the glossy sales pitches and significant powerful interests – from the banks to the taxman – willing property prices to rise again, it’s not surprising that a number of myths have emerged about how and where property prices can go.

One of the myths is that property prices will somehow revert to where they were a few years back, as if property price have some sort of natural buoyancy that causes them to rise over time.

History tells us that property prices can fall for long periods. Take the extreme example of Mountjoy Square in Dublin. When the elegant townhouses were built in the late 18th Century they cost £8,000 a piece. By the 1850s you could buy the same house in Mountjoy Square for £500. That’s a massive fall of over 90pc. We also know that Japanese property prices have not recovered to their 1990 peak – some 23 years later.

Granted, the Japanese and the Mountjoy example are extreme, but what happened in Ireland was also extreme.

If we take a bit of altitude and examine long-run price trends in cities where we have the data, such as Boston and Amsterdam, going back for over 200 and 300 years, we see that house prices rise only in tandem with inflation and income. All around the world, the few periods where house prices deviate from underlying inflation and income is when there is a speculative mania fuelled by excessive credit. Sound familiar?

So the first thing we can say is that there is no reason to believe that Irish house prices will rise above the rate of inflation.

This conclusion has huge implications for people in negative equity. Given that house prices have fallen some 50-odd per cent from their peak, and if we accept inflation will continue to be modest in the years ahead, it could take several decades for average prices to go back to 2006 levels.

This is sobering for all of us because of the way in which too much debt and deleveraging negatively affects consumer spending and thus, economy activity.

There are only two ways to eliminate the debt overhang caused by so much borrowing. The first way is where asset prices rise rapidly so that the owner can sell, pay back the debt and make a profit. This demands lots of frothy inflation in the economy. However, this isn’t going to happen as long as we are in a monetary union with Germany.

The second way is through a programme of debt deals where chunks of debt are “parked” to allow the debtor to breathe. But here too, monetary union has tied our hands. As long as we are in monetary union with Germany, the ECB will not allow such debt relief.

In contrast, if we had our own currency and a traditional central bank, we could do this unilaterally, but that option has been eliminated.

Unless there emerges a politician or political party that contemplates a new currency for Ireland, there will be no serious effort to alleviate the debts associated with the property bubble.

So where might this leave property prices? And how are we to value property, which is still – despite everything that has happened – the asset of choice for Irish people and Irish investors?

Probably the best way to value a house (for investment), if you accept that the capital gain approach can’t work over the long run, is via what income the house can give the investor. A quick back-of-the-envelope calculation would be to divide the rental income you get each year by the price of the house in order to calculate the annual yield per year for the investor.

Let’s take an average three-bedroom house and get the information on rents and prices from Daft.ie.

So taking south Dublin first, we see that according to Daft.ie, the average three-bedroom house rents for €1,656 a month, that’s €19,875 per year. The average house price is €265,000 so the yield in south Dublin is 7.5pc.

In Cork the average month’s rent is €865, giving €10,380 in rent per year and with an average house price of €148,000 the yield in Cork is 7pc. In Galway a similar calculations of rents of €824 per month and an average of €132,000 for a three-bedroomed house would give a yield of 7.5pc.

If we look at the commuter belt, taking an average three-bed in Kildare which rents for €760 per month – €9,120 per year – and costs €123,000, this gives the investor a yield of 7.4pc.

At the peak of the boom the average yield on all the above cases was 3.7pc. So we see that for the investor Irish housing is becoming better value but it is doing so only very slowly.

With such an overhang of stock and such huge amounts of debt yet to be dealt with, we should be surprised if yields go higher, meaning prices keep softening.

However, there will be many people who are sitting on large pools of savings that are yielding almost nothing in the bank who may be tempted to look at the property market again. All told, it appears fanciful that prices will rebound above the rate of income or growth, yet the ridiculous glossy promotion of property across the country continues apace.

This type of financial pornography should come with an explicit health warning that the type of monetary arousal promised in the glossy property supplement centrefolds can severely impair your financial judgment.

Subscribe to receive my news and articles direct to your inbox


  1. Lius

    Subscribe – Oh Yeah

  2. pauloriain

    Good man David, two great articles in a row.

    Would you agree, that maybe the prices have recovered and are where they should’ve been all along.

  3. New Bank Code

    Yesterday this act came into law and soon after many return home from summer vacation the process of repossession or forced sales will commence to be noticed by borrowers in negative equity and those with cash flow shortages .Only then and after that will property prices continue to plunge down .

    Satellite locations mainly in Dublin will be spared as a place of refuge for those endowed with blue monies and or reckless speculation .

    These safe locations are liken in history to place we have known before as Castles , Garrisons and round towers for monks.

    The masses ( ie U & I ) are exterminated .

    • John ,
      Are you suggesting that someone in negative equity is being foreclosed just for that reason. Surely if the payments are up to date the bank will be happy to continue that arrangement.
      Surely only those who are not or can not make the monthly payment are the ones subject to bank foreclosure action.

  4. Lius

    I don’t believe the average €1,656 a month three-bedroom house rent in south Dublin, these figures are being touted to make buy to let look like a viable prospect.

    I would say a truly “average” 3-bed semi-D in D16/14 is renting for €1,300 which would value those houses at €220,000’ish if you are looking a minimum 7% yield. That means that the values must still fall if they are to become good investments.

    One other factor that will come into play is tenant’s ability to pay rent. With tenants income being squeezed more and more, plus the possibility of social welfares rent supplements being reduced with austerity budgets rents could fall. We also have a glut of unoccupied residential property in this country which would push rents down if they came onto the market.

    • lff12

      Excellent point Luis. A lot of high earners simply don’t understand that for an average earner taking Home about 2.3-5k pm after tax, the realistic rent ceiling is about 650pm. Even for a couple, children dont earn so realistic rent ceilings for average earners fall at around 1300pcm regardless of the number of rooms.

      50% of the population have a household income that would fall beneath the median and these would have always been priced out of ownership so they will make up the bulk of tenants. There are pockets of exceptions in Dublin but unless Dublin is getting an
      Infestation of high earning ex parts like London, then it’s unlikely that rents can sustainably creep beyond these limits.

    • Joe R

      I think these American calculations are rubbish when to comes to estimating values they do not reflect conditions in Ireland in the least way.

      The big thing for me that is propping up rental values, which D McW lazily ignores is rent supplement. When he first starting on about this stuff there was no major unemployment crisis and landlords wouldn’t accept it. Now it is a cornerstone of the market. It is probably propping up a good chunk of it. Hilarious really the government artifically propping up landlords.

      On D McW, he should come down from Killiney Hill and commune with the proles for a bit – or even the poor suffering landlords.

      • Paul Divers

        Rental allowance has fallen in recent years Joe but I see the point.

        If they were to keep cutting it then that would affect the incomes of the gombeen men

        And we can’t have that

        • Paul Divers

          The gombeen men are not so choosy now.

          SW payments keep then in fine wine and pay the school fees. The state is a cash cow and everyone is at the trough

          • Colin

            Its the left winger do-gooders who want Rent Supplement payments to continue. Lets hear you have a go at them for a change! And by the way, that is Socialism, not Capitalism.

  5. michaelcoughlan

    Hi,

    You forgot to mention the third option in dealing with debt which is for the borrower to declare insolvency and let the chips fall where they may. Could be a useful negotiating strategy for gov. If the gov can bring the deficit down to 2% we will be able to get back into the markets for funding and the political dynamic may change. It would allow the gov to be more aggressive in it’s dealings with the troika and possible put options 1 and 2 on the table for discussion.

  6. severelyltd

    The problem with the yield figures is that they don’t take into account the rapidly rising incurred cost of ownership. You may have a gross yield of 7.5% but after property tax, water tax, broadcasting charge, insurance, services, and maintenance etc how much are you left with?

    • Typical net yields on a rental multi unit apartment complex are higher than single family houses.
      Event then the usual factor to apply for “expenses of ownership amount to 30-35% of the gross income. That allows for a vacancy factor of around 5%.

      With a house, the loss of one months income as a tenant vacates will be 1/12 of the gross income or 8.5%. That wipes out the 7.5% alleged profit before any other expenses are included.
      If the tenant walks out leaving a mess or damage it is easy to lose a years gross income just making the property whole to the standard it was when rented out.

      It seems to me the much maligned landlord in this blog is a fool to have a buy to let. The only profit to be had would be on property price appreciation. As David argues, how likely is that especially given a small rise in the interest rates, which in fact may cause a 50% increase in interest costs alone.

  7. 5Fingers

    You are looking at this the wrong way. We need a major property price ramp as flush out the remaining insanity. The sooner and faster it happens the better.

  8. Eireannach

    5Fingers,

    What you are somewhat melodramatically referring to as ‘insanity’, I see as merely the route to ‘wealth’ of a lazy, dullard people, most of whom spend too much time down the pub to develop skills which might haul us out of the slump in which we find ourselves.

    People want a solution to their problems that doesn’t involve any work. They want to property rat-race back, where all you have to do is have ‘skin in the game’ and you make money without doing any productive work whatsoever.

    Without developing any skills, any innovations, any inventions, and clever new ways of doing things – any of this hard stuff that involves thinking, energy and commitment.

    No, the Irish people want the lazy-arse conveyer-belt to ‘wealth’, called the property market, to come back.

    It’s one last lazy attempt by the Irish people to hope that their problems will be solved without actually doing anything useful.

    It will work for a time, the ‘dead cat bounce’, and when the second GFC comes, which is soon, the reall walk-up call will happen.

    So we need another, second GFC, and soon, to get the Irish to snap out of it and make an effort to develop skills, innovate, etc. Until then, it’s the punter’s favourite, property, that will be the usual ‘exciting’, ‘breathless’ conversation topic down the Oirish pub.

    • michaelcoughlan

      Forgive my ignorance eiteanach. What’s GFC?

      • Eireannach

        Michael,

        Global financial crisis. Second breakdown phase is soon, as the extraordinary low interest rates for Central Banks all over the world run out of road. Without QE we’d be in total catastrophic freefall already, i.e. GFC2.

        The mistake property people are making is they think ‘current prices seem about Wright’s. When GFC2 starts, that logic will fall apart, as political and economic confusion returns big time.

        When a former US president (Carter) openly states that the US is no longer a functioning democracy, you know preparations for police state control during GFC2 are well advanced.

  9. Adelaide

    Last week I saw the pitiful RTE News headline piece cheerleading the house price increase. I stupidly sat through its fluffiness waiting for the hard data in regard to the NUMBER of properties sold in comparison to previous years. My mistake.
    Does anyone the answer?
    At least they admitted that 2/3s were cash transactions.

    ps am I being mean or is RTE’s ‘Economics Respondent’ David “EH EH EH” Murphy a complete stuttering airhead?

    • Eireannach

      Another thing they didn’t clarify was that ASKING PRICES were up 12% in South Dublin, not actual sales prices.

      • Adelaide

        +1 I noticed that irregularity too. That NEWS piece was a marshmallow of “yippeeness!”. Their correspondent said akin to “this is good news as people will feel more wealthy”. Thankfully I don’t pay a TV License.

  10. David, you are just a banker hooker. There you go again with a winning strategy. Present a few facts, truths and opinions. Then give the only solution. A bank controlled money supply. Why not look at any other alternatives, for example a national bank or a treasure controlled money supply? Even if they are crap alternative to your favoured private bank owed central bank, are they not worth a look to a broad minded guy like yourself?

    Some questions for your fans to research before you reply to this OPINION.
    Who owns the Central bank of Ireland?
    Why was it set up in 1942?
    Back then was there any opposition to it?
    Who predicted this mess and put on public record “Credit, it cannot be too often repeated, has many of the characteristics of dynamite. Prudently used it can discharge many valuable functions, recklessly employed it can destroy the whole fabric of the State.”

    Few facts, M2 per capita in Ireland €38,400 EMU average just €26,660 USA per capita about €25,000. What would happen the new currency? Of course the insides like cypress would be hedged.

    What happens the money supply when someone takes their saving and buys a property?

    http://historical-debates.oireachtas.ie/D/0088/D.0088.194207170014.html

    • cooldude

      Fascinating debate IR. This bit by Dillon really caught my eye where he discusses the use of credit by the banks-”prudently used it can discharge many valuable functions, recklessly used it can destroy the very fabric of the State”. Deputy Dillon was on the money and reckless credit has now been taken on by the State and has destroyed it’s finances.

      On the shareholders of the Irish central bank I would venture that one of the main shareholders is Rothschilds bank in London as it is a shareholder in every privately owned central bank in the world. There is a school of thought which says the real reason Libya was invaded is because they would not set up a central bank to control the money supply. Sounds very plausible to me. Usury is against the Muslim religion and is still forbidden in Syria and Iran. Maybe thats the real reason they are under threat.

      By the way I think a treasury controlled full reserve money supply is an excellent idea and is worthy of a piece by DMcW. I very much doubt if it will happen though.

      • A1 Cooldude

        And do not forget Saddam who was about to market his oil in Euros rather than Uncle Sam’s Sleazy Script.

        Can’t upset the new world order now can we.

  11. dwalsh

    @ Tony & cooldude

    No Guys you are mistaken; the economic philosophy underlying the rampant deregulation of the past decades and the application of austerity as a cure for the crisis it caused is rooted in the Austrian school…not Keynes.

    • The cause of the problem was the easy credit debt based expansion of the money supply. Pure Keynes, total anathema to Austrians.

      Austrian have taught for decades that a credit fueled boom will lead inevitably to a bigger bust. Happens every time. Happened many times in the past and will again in the future.

      I have absolutely no doubt you have the cart before the house.

  12. GOLD continues to fall ….and is predicted to remain falling for another two years to $900 before it will begins to rebound …and that means rebounding at the bottom first before any notice of a rise ….certainly Dantes Inferno

    • michaelcoughlan

      Hi John,

      Show us your evidence. I have data to the contrary which I can show you.

      • cooldude

        Don’t mind him Michael he doesn’t have a clue. Tony offered him a bet on future prices and he ran back into his little hole. He is just trying to wind you up.

        • michaelcoughlan

          Ok Thanks.

          Just to put him in his place:

          %
          % T %
          E
          K
          C
          O
          R
          L
          L
          I
          W
          D
          L
          O
          G

          See 5:09 below. We are in the start of a wonderful bear squeeze.

          http://www.youtube.com/watch?v=KkXmEECzxRM&feature=youtube_gdata_player

          • Alastair McLeod Director of Goldmoney.com has a vested interest to be interviewed by Keiser to spin his yarn and prod the Bank of England with conspiracies.

            He looks desperate .

          • michaelcoughlan

            If that’s the best you can do John you haven’t a hope.

          • paddythepig

            Only the market can arbitrate on who is right or wrong.

          • michaelcoughlan

            You are correct paddythepig and I’m humble enough to eat humble Pie if wrong.

          • Someone is going to get fat on humble pie

          • I am always an admirer of Jim Rogers co founder of Quantum Fund with George Soros and always has a great insight to the future trends and generally outspoken.He predicts Gold to reduce by 50% from its peak to around $900 and will take two years to bottom.

          • michaelcoughlan

            Hi John,

            That’s a straight forward lie regarding rogers. He predicts the exact opposite. Once again let’s see your evidence or fuck off.

        • Jim Rogers

          Please read Money Week Issue 650 ; date : 26/07/13 Page 7

          Facts are written as I said above .

          • michaelcoughlan

            From the EXACT SAME article,

            Rogers is “not selling gold at the moment”, he tells the FT. Indeed, “if it falls or if it gets down [to $900], then I hope I will be smart enough to buy more.”

          • michaelcoughlan

            One dimensioned would be a fair assessment of your post John.

          • There is no one dimension .He will not sell his gold NOW at a loss and rather instead buy it after it reaches $900 …so its going DOWN as he predicts .

            Take some humble pie now before it gets hard

          • michaelcoughlan

            If you knew anything about investing John it is a most important skill to cut your loses quickly. Your post regarding “he will not sell now at a loss” is what people who lose their shirts in the markets do. If he thinks it’s going down why would he buy more?

            Incidentally rogers also advocates purchasing farming land. Self sufficiency all the way.

          • Paul Divers

            You lot should listen to yourselves. Get a life lads.

          • Here’s a meaningful oracle: although stocks made new highs today, the Dow in gold and the Dow in silver did not. Dow in gold was flat at +.2%, 11.947 oz (G$247.03). Dow in silver in fact fell 1.3% or 10 oz. to 786.73.

            Both these indicators are warning that stocks are about to lose value against metals. That implies metals have already put in their lows.

            The money lender Friday report

    • dwalsh

      The natural price of gold in a stable economy is somewhere from $200 – $400 (in today’s dollars). It rose to $600 in the 1930s. The enormous bubbles we have seen in the price of gold in recent times are no doubt primarily due to the uncertainties introduced by abandoning the Bretton Woods system and rampant deregulation and criminalisation of the financial sector.

      Gold is a good store of value in times of uncertainty; if you buy it early in the cycle. Today gold is in a massive bubble; a bubble which will rise and fall and will not settle until the train wreck that is the global economy is addressed and brought under proper control.

      • cooldude

        i’m sorry to disprove your prices Mr D Walsh but you are talking complete tosh. The price of gold was set at 4 sovereigns to one pound. The price of the dollar was twenty $dollars to one ounce. When FDR confiscated the American money he immediatly re priced it £35 dollars. This price continued to 1971 when we started with the funny money backed by nothing only the banking families whose eventual goal is to control all of us,

        I think me you and Tony are actually on the same side. Its actually the central banks who control EVERYTHING and they love to see us idiots having a row.

      • Gold has been suppressed in currency prices for at least 14 years and probably longer.

        By any measure of past prices of gold being set on the inflation index then the current value of gold should be anywhere from 2500 to 11,000 per ounce. I think a visit to http://www.shadowstats.com will show the graphs.

        The official rates of inflation are also suppressed so the upper figure is arrived at if the real rate of inflation use used as the metric.

        From there it follows that if the price of gold and silver were in a bubble as you describe then the price of gold should be double that or near 20,000 dollars an ounce and silver near the same as it is more rare than gold these days.

        Now when this does happen there is a chance that other hard assets like land and buildings may also react to inflation and everyone will be riding high with equity restored!!

    • You are quoting the banksters as they entice, threaten and cajole by any means possible the possessors of gold to dispossess.
      So there would be some available to short the market yet again.
      It is a desperate ploy as there is little physical gold left available to buy as 10′s of 1000′s of tonnes have shipped East from the West never to be seen again.

      The same is true of silver but in this case it vanishes due to industrial consumption as well as being used for money.

      http://simple.wikipedia.org/wiki/Talent_(weight) “In ancient times the same amount of silver was often worth more than gold.” And may well be again.

      The physical market is overpowering the paper market in gold and silver.

  13. joe hack

    I see you have a lot of the gold heads here today, the destructive drug induced gamblers!

    I sometimes wonder do they not realise they are part the problem a bit like listening to the likes of George Sores without a steroid filled wallet, narcissists.

    I believe they are on the wrong site as rarely do they comment on, debate, or relate to the hosts chosen topic of the day. I am sure they could fit the topic of gold into the host thoughts on the price of a house or whether Ireland should be in or out of the Euro? :-)

    • michaelcoughlan

      Joe,

      Offer evidence for narcism or fuck off.

      • cooldude

        Look Joe taking responsibility for the future of your family is not narcism it is simply common sense. You believe that the State will look after you and you have obviously great confidence in that plan. Personally I dont think the State, especially our crowd of ex public so called servants could organize a decent piss up in a brewery. Look Joe this is all about personal responsibility. Either you expect a recently bankrupt entity like the Irish State to look after you or you actually decide to do it yourself. On the price of houses in relation to gold these charts are available and they show very clearly that central bank induced credit excess robs ordinary citizens of their wealth every time. Do you want me to give the link or would that interfere with your Marxist mind set.

        • joe hack

          The point is, it is not credible that you might complain about the flawed money system and more, or maybe the Anglo bank or the Anglo tapes.

          The likes of the wall street set and others or maybe even Hitler might say exactly what you have said and the only difference and guessing here, is that they are playing with bigger wallets, but the principles or lack of principles are similar.

          This is part of what Joe R had to in a post below this one… “The greed in Ireland involved ordinary people as much as the Sean Dunne’s and Jonny Rogan’s of this world”

      • joe hack

        (how did not see this comment earlier}

        Ouch!

        Did I call you a narcissist?How could I know that considering i have not met you?

        Here are some so called narcissist traits copied and pasted from doggy web based encyclopedia

        “(narcissistic abuse) Detesting those who do not admire them” “fuck off” – is that abuse or anger?

        “Using other people without considering the cost of doing so” I wonder does that mean speculators

        “Hypersensitivity to any insults or imagined insults (see criticism and narcissists, narcissistic rage and narcissistic injury)” who not guilty of that have ever seen the rage on here sometimes?

        • michaelcoughlan

          Thanks for this much better. Sorry for the expletive. Will hold my Tongue in future. I understand where you are coming from now re gold. I only think gold is very important at the moment because the worlds economic system is so dire. Gold has a part to play in putting manners on GSucks etc. I have always said that the real wealth lies in the skills of the person and that hold allows fir the trading of that skill with others. Ie gold functions as money. If it is pure speculation then I’m opposed to it as I have been opposed to speculation in hedge funds where the real problem lies.

          • cooldude

            Well said Michael. This dickhead never ever discusses the stupidity of our current monetary system. I actually think he is a student and an avid Marxist. I have absolutely no problem with his views except Marxism robs all individual wealth from everyone and then shoots everyone with even half a brain. Gold is just another form of money. Central banks hold it as a reserve but some how certain people have been brainwashed to believe it is some how evil. Its just another form of money as both know but ignorance is rife around here.

          • joe hack

            @ Not so cool-dude, it appears a nerve was touched, generally meaning their ethics or morality issues- your welcome.
            Ignorance is demonstrated in your ability to name call it is also demonstrated attempts to pigeon hold someone as be part ideology grouping – so as to dismiss logic.
            ————————————————————————————–
            If only you were more interested in the price of spuds or those issues that affect the health societies “economics” one might take you serious but when one is fixated with the fiat monetary value trinkets (that would mean you value fiat money) one can only assume that you are self sever, a speculator, a tiger waiting for the runt of the packs to pass by but be wary one can only assume that you believe in survival of the fittest this has drawbacks as there is all always someone fitter at any given time and most end as a runt.

            There is difference in what one does to get by in a system that exists, that what one does to promote a world one would wish for. Both can be admirable but one always needs to be aware of what lays ahead for those that follow (ones kids maybe)

    • John Allen introduced gold on this topic and was wrong and deserved rebuttal.

      Gold haters are more rabid than any gold bug I ever met.

      As for the later paragraph it is nothing but snide innuendo and incorrect. .
      time for you to grow up.

      • Dorothy Jones

        Difference between Tony Brogan and John Allen :
        -One ‘jaws on’ and rolls the site with gold stuff no matter what the subject
        -The other one has lots of gold and isn’t sitting under a damp bridge being nasty to those they meet

        • Dorothy Jones

          trolls not rolls..but rolls does it too…as bullies will always pretend they will knock peoples’ lights out.
          Gold my arse…

        • Obviously you head is a little fuzzy Dorothy Jones.
          I have noted you have made comments to me, about me, over the last week or two. You are becoming deliberately provocative as I have said nothing to you. I recall an agreement we made after we had had a few drinks together that personal stuff would remain off the blog. I particularly stated I made a policy of not mixing public statements with private information.
          I hold to that but if the agreement is broken by either party it is broken. It is dangerously close to being broken.

          As far as the above statement but ignoring all that trivial stuff about being under a bridge You will see as everyone else will see that the first introduction of gold to this theme was by John Allen. Not for any other reason but to diss it. And without any facts.

          That was at 1.20 pm on the 2nd. It was followed by about a dozen rejoinders over a period of time in which I was not involved. There were 3 or 4 participants. I finally made my first comment that mentioned gold about a full 12 hours later.

          So please get your facts straight and the chip off your shoulder when it comes to me. John Allen was offered the chance to make 100,000 off me if he was correct and I not, but he declined to respond. He is, according to you, a successful businessman and also according to you has a lot of gold. This, I hope, is correct on both counts as I wish the best for all people. He also moon wobbles!!

          As for your accusation that I am a bully. That is the total reverse. Most of my early life, that is the first 16 years was spent in many areas defending myself from being bullied. In later life I have found that bullying is more subtle but I will still defend myself from it.
          As a boxing coach I have taken quite a few potential bullies and helped turn them into self respecting confidant citizens. I am proud of that little niche of my life.

          So Dorothy I wish you the best as well, and hope you survive and thrive.

          • Dorothy Jones

            Stuff your platitudes you idiot bully.

            You are a nasty piece of work scrounging on the good will of others while spouting about gold while you have not a penny in your pocket.

            You are a boxer alright, paying your creditors a fraction of what you owe while drivelling on about living within their means.

            Twat.

          • Dorothy Jones

            Talk is cheap, pay your own way and that what you owe to others before your daily circle jerk

          • As I said above Dorothy
            I wish you well.

          • Dorothy Jones

            As I said you twat; stuff your platitudes and enjoy your circle jerk. Your behaviour in real life is disgraceful. A broken record jawing on about gold while being nasty is just as banjaxed and a heap of old rust as that bicycle of yours.
            Idiot scrounger.

          • Colin

            Tony,

            You’re always welcome in London, where we don’t spill the beans on matters said in confidence.

            You’ll find one of those pubs Dorothy loves so much in every Irish neighbourhood, you know, the ones where the recently arrivied Irishman frequents. He got sick of being on the dole back home and having a nagging wife on his case about how her standard of living has taken a turn for the worst, and now she can meet the girls for lunch on a tuesday afternoon following a round of golf and before a game of bridge.

            Yes Paddy, don’t take it like a doormat anymore, stand up for yourself, get on that ryanair flight for €19.99 one way (not including taxes and charges) and pick up some work, then have a few pints with the lads after it.

            Cheers Dorothy!

          • Dorothy Jones

            Ah Colin you never did get over that wife comment!
            Well, a TB deserves a good kick up the arse from his sojourn, feckin’ neck of brass and rude to boot.
            Tons of work this neck btw, send links back.

            Cheers Colin!

  14. joe hack

    A new world order is fast a approaching…

    Avoiding the normality bias as is certainly the case in the USA with its media avoiding the imminent demise of the dollar as the world’s reserve currency…

    What will replace it? Where would Ireland be best placed when this the inevitable happens?-in or out of the Euro? You would be surprised at the number of country not used the dollar and actively blatantly seeking other ways to do business in spite of the USAs hegemony.

    Gold maybe a factor in a new multi denominational reserve currencies avoiding an the all potent and brazen situation as is/was the case with a single reserve currency the dollar ( Bush “a new world order” has come to mean something else- The cost of wars) (World Currency)

    Nixon dollar deal with Saudi Arabia is very shaky as it selling more oil to china than it is to anyone else china may/will dictate how Saudi Arabia pays for it. Iran is circumventing USAs sanctions and there little the USA can do as the world is turning against the hegemony of the USA. China, India, and Iran are working on a barter system to exchange Iranian oil for Chinese Indian imported products which has already started.

    {Special Drawing Rights (SDRs) ( http://www.imf.org/external/np/exr/facts/sdr.htm )}

    On June 1st, China and Japan began trading using their own currencies. When the yen-to-Yuan trade began.
    The dollar the BRICS and many others and dealing directly and many more

    We are seeing the advent of the new world currency order, maybe a dollar zone, a Yuan/BRICS zone, and the euro, with the Yen and the Pound World Currency.
    The euro crisis is suckering the nations into surrendering budget responsibility to Brussels. This is the final frontier for a full blown EU federalist Super State.

    Where does Ireland fit in the very near future new world order, in or Out of the euro?

    • Congrats on the above observations. Nice to have you join the club. It is as we have been expounding the last two years.

      The BIS SDR are in my opinion the near final step to have the banksters control the one world currency for the NWO. Officers and employees of BIS centred in Basel, have already obtained diplomatic immunity and can travel the world unchallenged by any national or international government. That is they rule the roost.

      Curious when you consider that the BIS is a private, Rothschild et al, organization. The banksters control all the West already. Our only hope is that countries such as Russia and China can maintain their independence and thus thwart world dominion ambitions of the self anointed and thus save us in turn.

      Ireland and all countries should maintain their own currency, but better yet the use of money should be declared a fundamental right of free people. Money is private property and the legal tender laws should be repealed.

      People should be allowed to use the money they find bests suits themselves.

      • joe hack

        money is not thing! Ya hcq gtqhbqhh fuger bahhhh yeee bang

        put that in pannier bags and and go park and a ride

        fugin feck yayy shake yourself up

        • One minute you compose a rational well presented set of observations and the next you rave with spittle on your chin. I prefer the former but I was confused why you put a link to SDR where it did not seem relevant.

          • joe hack

            I heard you have small chin, I read it some on here I hear that happens when people talk drivel.

            Money not thing or yoke, get with the program and stop trying to make your wish an imagined fact.

          • joe hack

            SDR was relevant as the amount fiat money used in it as greatly risen.

            It has gone from 20 to over 200 billion in short space, evidence that dollar is not been trusted or is pushed aside – hopfully

          • SDR’s are used as reserves for central banks in trouble.
            I am not aware the Fed received any of these reserves.

  15. SMOKEY

    Bills that cant be paid wont be paid. Why? Because of the lack of funds to pay. So the bulk of Irish households will not be buying investment property. They cant even pay what they owe now.
    But, if you posses the aforementioned “large pools of savings” you have every right to become a landlord if you choose.
    Many older folks feel that bricks and mortar are more suitable investments as they can physically get their hands on the investment, whereas a punt on Netflix or Facebook mightn’t have the same appeal. These are the same people who buy prize-bonds and eat their dinner at 1 p.m.
    Also many a Dad or Granddad that is of sufficient means knows that if it goes pear shaped and it doesn’t give him any joy he can always leave it to his heirs and they will eventually see a real gain. So for him, how bad?
    I will make a prediction this is limited in potential to the growth of any sort of sustained housing boom, as while there are many who WILL buy now, there aren’t THAT many, and the recent weather event certainly helped sales in that period. Just a guess.
    Ill bet there werent as many sales in the last 10 days as the average mean of Ireland has returned.
    There are still businesses going to the wall and start ups failing at a fairly good clip due to the lack of funds.
    Ardmore Pattern festival had lots of visitors this year, but a lower spend per head was evident to traders. Less money sloshing around,its that simple.

    • Eireannach

      ‘bricks and mortar are more suitable investments…’

      I hope for their sake property somewhere, anywhere, can still be called ‘an investment’.

      When GFC2 hits, after the cheap low interest rates of central banks runs out of ammo, all property in Ireland and the UK will suffer a second shock.

      Its guaranteed. GFC2 is approaching. Au revoir property equity.

  16. joe hack

    “All told, it appears fanciful that prices will rebound above the rate of income or growth, yet the ridiculous glossy promotion of property across the country continues apace.” D McW

    As you have mentioned Amsterdam and Boston over a 300 year period there are many economist and like mined people that point to the real rise in house price over long periods. Most suggest that house price averages have only doubled when compared to earnings.

    I believe this make logical sense and in fact I believe that when other logical factors are taken in to account it maybe that house price to income is in fact stagnant over time, quite simply for them to be affordable they must be stagnant.
    The reason I believe they are in fact stagnant over time is that the economist have not taken in to account the extras that are needed and are also required by law when building a modern house.

    Today the building regulations are far beyond four walls, a roof and a door, if you buy such a house and then add wiring, plumbing, a kitchen, insulation and the many other modern fittings while complying with regulations you will find the build costs more than double the original basic build cost.

    Therefore the build cost of modern average house will be at least double, that is to say the average house has been ‘?improved’ and costs ‘?relate’ to these improvements and this is reflected in average house price over time.
    House prices are in fact stagnant and that as it should be, this is necessary so that the average wage earner can a afford a house, house prices need to be related to a average wage.

    Speculators and investors (greedy fuckers) have manipulated the real economy; this along with the debt based money system is criminally immoral. The flawed banking system is the greatest manipulator and it affords the greedy (those that live in fear or the myopic minded and some may still carry a security blankets) to take from the average earner, in doing so their short sightedness is destroying a societies ability to function.

    “All told, it appears fanciful that prices will rebound above the rate of income or growth, yet the ridiculous glossy promotion of property across the country continues apace.” D McW

    • Joe R

      Total rubbish.

      As someone who designed schemes from inception ( pre site purchase), executed all types of building works and oversaw many types of building contracts between 1998-2011 you are talking through your hat.

      The greed in Ireland involved ordinary people as much as the Sean Dunne’s and Jonny Rogan’s of this world.

      • joe hack

        Your response is that idiotic kid…

        How long have I been involved in the construction business – well it’s about 3 times longer then you but what has that got to do with the facts. I am basing my words on statistical research crated by a plethora of economists who have researched the values of properties back over hundreds of years and not just since you were still in your nappy’s back over all those 13 short years ago.

        Do some real research before you make moronic childish assertions based on the follow immature statement “I oversaw many types of building contracts between 1998-2011” Your response is childish and it’s just a biased short myopic personal unsubstantiated view.

        And yes, I would agree “ordinary people” as you call them, are no different in their abilities to be greedy as this conduct relates to human nature, and that is why I advocate that we need regulation, similar to reason we have a policing system for what is deemed as criminal acts. However I did not single out the greedy speculators from any particular walk or so called class which you have alluded to as this has little affect on human nature, but, since you raised the topic as to who might be to blame there were persons were charged with a duty of care over our economy and they failed in their duty to oversee banking system.
        However before you go shouting at those in the Irish banking system consider who or what you should be shouting at or about – The monetary system that Ireland is embroiled in is a lot bigger than this little corner of the planet is capable of controlling and this is partly why we need to seriously consider taking control of our own currency.

        Joe R the greed in Ireland has not gone away you know it is just in negative equity while stalking in the long grass waiting the runts of the pack come it’s way – easy pickings.but real hard work which serves a society.

        sorry to hear you need to defend the “the Sean Dunne’s and Jonny Rogan’s of this world” I am not too sure they care to much about the “ordinay greedy peoples”

        • joe hack

          but not the real work which serves a society.

        • Joe R

          Plethora of economists? My research? Insecure about your stupidity – well you should be.

          Look at the length and coherence of this stupid rant and tell me again that I am child like, please – it is a great laugh.

          Irish construction price index is all you need!

          No opinion just fact.

      • Colin

        …which explains your obsession with my worklife a few weeks ago.
        And before you ask if I am logging on to this website during my coffee break, the answer is no, I have the day off work today, after working the last 9 days in a row. Flexibility in terms of being able to change your work patterns to suit your employer is a big plus these days.

        • Paul Divers

          Go and get yourself a haircut.

        • Paul Divers

          What left wing do gooders were you referring to above?

          I don’t know any one like that personally

          • Colin

            What’s going on Pauldiv, do you not remember the request you posted yesterday, I’d say you’re obsessed now, or Alzheimers is setting in?

        • Joe R

          No, it explains my ability to detect your jumped up self important BS. You advertised the details of your sad life on here. You parade it around.

          Nine days of work and then you get your kicks by coming on here and being a negative snide so and so…well if that is the way it is then I believe you Colin.

  17. Bamboo

    At this stage we should all know better and be informed about the property crash in Ireland. Apart from the GFC, this crash is also caused by banks, property pornographers and mainstream media.

    It is now up to the people themselves to make whatever they think is the best for themselves. People should now know that they shouldn’t trust the banks, the fantasy data and statistics produced by the ERSI, DAFT, etc about property.

    We should all go by our gut feeling now and if it ends up in tears again, we know that this time we can only blame ourselves.

  18. paddythepig

    http://www.politics.ie/forum/current-affairs/213930-hayes-i-dont-see-troika-bogey-man.html

    Super post by ‘roc’ on politics.ie ; ‘roc’ used to post here once upon a time.

    • Paul Divers

      Read it Paddy

      Funny how the last things he says is not to label him as self loathing. He knows it sounds like self loathing.

      It’s like when a comedian says – here’s a good one … this is true I swear!

  19. dwalsh

    Interesting article David.

    Anyone with significant savings in a bank is likely to be considering putting them into some kind of hard asset given the internationally agreed bail-in policy of dealing with bank bankruptcy.

    As to the foreign investors; I think a lot of that money is coming from the financial sector. They are processing digital and paper profits into real assets. It’s a sort of laundering operation. It’s going on across the world. Greek islands are going cheap.

    • joe hack

      I wonder is Noonan thinking of buying Greek island as I heard he knows everything about the production of feta cheese; it might be a Greek tragedy for the Greeks if he did.

  20. Paul Divers

    On the surface the tone of article conveys contempt for the home ownership culture and then goes on to disseminate amazing facts and figures about the property porn scene in considerable detail. It sounds two faced. Make your mind up kid because you sound totally lost in this new world

    This week the home ownership culture has been linked with bad politics and corruption. Finally. And a theory has been put forward that if the human race had always behaved like neo-con knuckle draggers and victorian darwinists then the race would have perished long ago. It’s been a bad week for right wing home ownership loving dreamers

    I guarantee is was not an Irish journalist who made the link and published the article because Irish people are not capable of such basic intellectual honesty when it comes to money; they can’t be trusted and the world knows it; they even know it themselves!

    The sad thing is that most people never manage to pay off a mortgage. It’s a huge ask and unrealistic and still they fall for the dream and propaganda. ‘Renting is dead money’. Yeah right. These tired old boring cliches are never challenged and should be flushed down the toilet

    Then we have the gold bugs and other assorted weirdos who collect stuff that is totally worthless, probably through poverty consciousness and a lack of belief in themselves as individuals. Talentless chinless wonders

    It was also suggested this week that being mean, selfish and nasty has a detrimental effect on one’s health. It’s a warning to us all.

  21. “Then we have the gold bugs and other assorted weirdos who collect stuff that is totally worthless, probably through poverty consciousness and a lack of belief in themselves as individuals. Talentless chinless wonders”.

    Remarking in a negative fashion on the physical structure of someone is considered to be abusive these days. Accusing a gold bug of being talentless is a contradiction as a talent is a body weight of gold or silver.

    It would appear you are definitively talentless but I have yet to be informed about your specific deformities. Of course one can always speculate as do you.

    http://simple.wikipedia.org/wiki/Talent_(weight)

    “When used as a measure of money, it refers to a talent-weight of gold or of silver.”

    • joe hack

      Tony love,

      Do you price your gold in dollars or some other fiat denomination? It is oblivious you do all over this blog. So you value gold with the money that is in control of the world economy which in turn controls gold’s value some, by default.

      Money is a trust based tool, that the trust is broken is clear due the results many things – greed and mismanagement…- your method to fix it is primitive… gold, potatoes, tally sticks, can all by used a money system that not near what you are advocating.
      You advocating anarchy you made not believe that bur it would the result of what have said.
      ps i am fitter than you so in your world I win I take food and leave you metal trinkets survival the fittest….

      Tony love,

      I am starting to imagine you as Quasimodo on a cycling trough the crowd at the feast of fools while trying rescue Esmeralda and shouting ‘it’s the gold, it’s the gold, it’s the gold’…. maybe he should have not rang the bells

      Sanctuary, Sanctuary… for my gold

      Gold porn doesn’t float

      • Do you post everything twice on purpose. Once is too much with tripe like this.

        • joe hack

          Stop latching to my post twice if bothers you it was accidentally placed here and not meant for Tony Brogan you appear here like narcissist it’s not all about you is it? Does say this for Tony Brogan anywhere

          • Well it was posted under my comment and used my name twice in its content. Still I suppose the mentions were gratuitous and as usual your comments mean nothing much at all.
            Vacuous winds blowing in cyberspace.

          • joe hack

            You need to lighten up Tony love That’s means Tony brogan.

  22. Paul Divers

    Touchy. Who said anything about physical deformity?

    Are you well in the head?

    Chinless is a metaphor for people with weak spirit

    I didn’t say a thing about physical deformity and it never even entered my mind. Get help you prick

    • Can’t be too careful these days. Never know who will take umbrage at the silliest of things. Some are very sensitive to having a recessed chin especially as it is not really their fault. Yes I can see that this thought never entered your mind. You are correct on that. Maybe next time.

      • Colin

        Having a go at David and the ‘right wingers’ and getting pissed are the only things that enter the mind of Oor Paul.

        • Paul Divers

          You seem to be obsessed with me pal.
          Look. Don’t answer my posts and I will not answer yours. It’s simple.

          • Thus spoke the Narcissist

          • Colin

            Tony,

            Its a big change when Oor Paul asks me not to comment on his posts. He thinks I’m obsessed with him …. but it is he who was mentioning my name in his posts quite regularly for a long time now. He even claimed I entertained him, remember all those lols, ‘hilarious’ – I remember him saying. Oh well, that joke isn’t funny anymore apparently. I mean, I’m a generous guy, and I am happy if I make anyone laugh, no fee – unlike Tommy Tiernan and his cohorts.

            I remember David telling him to clear off before, but he keeps coming back like an unwelcome stranger.

            So, its gonna be strange not seeing my name mentioned in his posts anymore, but I will get used to it eventually. I guess my mate Adam is in the firing line now.

          • joe hack

            Tony Brogan says “Thus spoke the Narcissist”

            excellent tony

            are you taking to me

            What you looking at

      • Paul Divers

        You are referring to political correctness gone mad Tony.

  23. joe hack

    Tony love,

    Do you price your gold in dollars or some other fiat denomination? It is oblivious you do all over this blog. So you value gold with the money that is in control of the world economy which in turn controls gold’s value , by default.

    Money is a trust based tool, that the trust is broken is clear due the results many things – greed, mismanagement…- your method to fix it is primitive… gold, potatoes, tally sticks, can all by used as a money system that’s not near what you are advocating.
    You advocating anarchy, you made not believe that, but it would be the result of what have said.
    ps I am fitter than you so in your world I win I take food and leave you metal trinkets starve with -survival the fittest….

    Tony love,

    I am starting to imagine you as Quasimodo cycling trough the crowd at the feast of fools while trying rescue Esmeralda and shouting ‘it’s the gold, it’s the gold, it’s the gold’…. maybe Quasimodo should have not rang the bells
    Sanctuary, Sanctuary… for my gold

    Gold porn doesn’t float

    • joe hack

      oblivious= obvious

    • “Money is a trust based tool,”

      The only money that has no counterparty risk and can therefore be trusted is money with intrinsic value. Chosen by most of the world to be silver and gold.

      For a view of the current quest on honesty about the precious metals market you should visit http://www.gata.org There you will see a painting by Alain Despert http://www.gata.org/node/7606
      Of a Don Quixote character leading the masses on a quest for truth.

      What it is priced in is irrelevant as it matters not. The question will be how many ounces you have as all else will be valued in relation to that.

      You claim it to be primitive but some principles are timeless and enduring. Your ranting opinions however are fleeting.

      • joe hack

        “What it is priced in is irrelevant as it matters not. The question will be how many ounces you have as all else will be valued in relation to that.” Tony your asking question on what might be.

        Then if you want it to be the new money system stop compering gold to the fiat money system which 7 billion people use.

        In you imaged world your above statement might be true be in the real world of 7 billion and Tony is not factual.

        I am not referring to gold as primitive it is your ideology am referring to.

        • Joe, I have a great deal of difficulty defining what you are actually trying to say.

          A lot of your statements are garbled with poor grammar so I can not follow your thinking.

          What does this mean?

          Tony your asking question on what might be.

          Or this
          “I am not referring to gold as primitive it is your ideology am referring to.”
          What ideology do you refer to.

          Or this
          Then if you want it to be the new money system stop compering gold to the fiat money system which 7 billion people use.

          and this
          In you imaged world your above statement might be true be in the real world of 7 billion and Tony is not factual

          If you mean the statement about most of the world preferring gold and silver as money you will find that 2/3rds of the world are buying gold and silver. The refineries can not keep up with the demand. The mints can not keep up with the demand. The physical demand for metal is being supplied from western funds and central bank accounts and being dumped on the market.

          The western central bankers are desperate to keep the appearance of normalcy and interest rates down or the fiat monetary system implodes.

          Gold is the barometer of the health of the economy. Low pricing in good times , high pricing in perilous times. The people can be duped by manipulated statistics including the artificial price of gold.

          Many are not duped and are buying pm’s at these current low prices. They buy to protect themselves from the coming collapse of the fiat currencies. Chinese, Indians, Arabs, in fact just about all except the westerner who still thinks in terms of paper money and that the government is here to help you.

          • joe hack

            Sorry tony, I on dumb smart phone in bar waiting for someone and the phone posts messages without me checking or at least my big thumbs

            Cheers mine pint

          • Well Joe we will get on better if personal references are left aside and we talk to each other.
            I recognize your social concerns and I share them.
            I hope people are not devastated by what is to come. Already for a lot of people it is Bad.

            We will need to help each other in the near future if not already.

            Last night I hosted a birthday dinner for my twin son and daughter plus elder son. Each with a friend/partner/spouse.

            Good meal. Great restaurant. Great family gathering. The bill took a quarter of my monthly income. I will recover by not buying any wine for 3 months!!!

            Have a pint for me Joe, it is a long…. weekend!

  24. [...] it ever occur to you that its a ploy to make people think they better start buying stuff again ? Property porn doesn’t float | David McWilliams Sign in or Register Now to [...]

  25. Deco

    Nothing appeals to the inner idiot of the chattering classes in Ireland than the national quango for propaganda declaring that house prices are up in South East Dublin. (SW Dublin is still in a state of shock). It hits the spot. It is more soothing than a 50is blonde bimbo declaring on the shopping hour that this is the must have for anybody out there.

    It does wonders for the collective self concept, and rebuilding past delusions, to have foreign replacements for the local fast money cowboys showing up in Dublin, on the whiff of another property boom – when there are sceptics abound.

    David’s article is well worth reading by the entire public – so as to understand that humility can stay around much longer than any silly euphoria about nothing generated by the “property-porn-complex” in Ireland.

    With regard to the return on property figures, I would add minor details that could alter the dynamic.

    1) The major central banks of this world have now all increased the money supply since 2008, this lifted the stock markets, to levels that are unsustainable, and pushed up real estate valuations in countries not gripped by it before 2008. There has been a re-ponzification of the economy, by moving the bubble around to somewhere seen as “safer” than either US subprime, or Euroland countries with top heavy bureacracy. This will end in the next six months. A lot of the carpet baggers might return to find their own asset values diminish.

    2) China is in more trouble than economic statistics indicate. And the construction boom there is unsustainable. The banks are rotten. The debts are out of control. The China premium is about to get unwound. Australia is heading for an Ireland style banking crisis. And that means that many Irish are coming home. Many of them have been doing more important things than saving money in Australia. The dole beckons. Those that return to provincial Ireland will survive. But there could be pressure in the East of the country.

    But….it will NOT drive up houseprices. It might cause more building activity as the housing density level increases in Dublin. And let’s face it – it is too near that of Los Angeles to make any sense currently.

    3) France and Belgium are stumbling from one crisis to the next. You would never know if you were relying on Pravda/RTE for your information or the Schitzo on D’Oliers Street (The Irish Times). This is going to show up after the German Federal Elections. Neither side wants to lose votes to the new party that is sceptical of the ECB. It would rock the sponsors of both sides.

    4) Spain’s debts are mounting. An IMF bailout is only a matter of time.

    5) AIB – what is the story with AIB. Does anybody know ?

    And BoI is still in a sore state.

    And then there is Permo – debts are still out of control.

    The banks….they have not gone away you know.

    6) The overloaded overextended Irish institutional state simply does not understand the concept of moderation. It continues to mess up behaviour, and is the number one limiting factor on economic recovery. Interestingly, it is also extremely busy selling itself to the populace as the source of everything good in this country.

    We have yet to meet the concept of “Peak Institutional State” in this country.

    7) Real after tax incomes are barely rising. And the requirements of 6) mean that it remains public policy to keep them going down.

    Folks, get ready for more austerity.

    Oh, and I predict a new trend. People from the provinces with jobs in Dublin, buying their residence for settling their families in the south and west, and continuing to live in shoebox apartments (for which there still is an oversupply in Dublin). This is an Irish manifestation of a trend that is already evident in the US. The term in the US is the “i-partment”. Maybe in Ireland they will be called “i-flats”. Or even smart flats. Basically, just having an apartment of the bare minimum size in Dublin for a near work pad. A downscaling of ambition with respect to real estate requirements.

    Don’t expect the Property Porn Industrial complex to be enthusiastic about any of this. In fact, we should expect them to do everything to make sure that it does not happen. It is hardly any wonder that Bunny’s new licence fee plan is to cover tiny apartments what do not have a TV, whilst he is also reneging on previous state policy promoting broadband.

    Technology must not be allowed to undermine the Irish establishment, by offering people different rental behaviours.

  26. And notes on more manipulative statistics, why the derivative market days are numbered. Why the physical PM market supply is contracting, why soon there will be little left to buy just when you might want some!!

    http://campaign.r20.constantcontact.com/render?llr=n7vdaxbab&v=001wqUa7FwuvM6LR4cSrrMSoggV8iZXCNN41UzpN92IR8W0pWH5xrwBI_qgsD3MjMDfFXDZat5WCPww_Q1h_-GQIqGfB8HklQGgKf8Qc44yg4trm4OSVKxz7BJ8HWX6Rrxz

  27. dwalsh

    Hi Tony Brogan

    The credit expansion was driven by deregulated private finance. The myth put out by Greenspan was that the market would self-regulate; that is pure Austrian; and pure bull as we now know.

    • Goodday to you.

      Of course the deregulation allows expansion. Depends on the regulations.

      You do not address the fiat money system of debt based credit notes issued by the central banks as reserves to the commercial banks. You do not address the fact that the commercial banks can use what is called fractional reserve bank procedures to us the central bank money as reserves and then expand that almost limitlessly to flood the market with as much as can be loaned out.

      Loaned out is the key. It is entered on a leger sheet as a loan and then spent into the economy. This means as has been expressed before many times by different people that 94% of our moneysupply is a debt, an iou.

      neither do you address the fact that the interest charged on these loans has no corresponding money issued to account for it. This is the Ponzi scheme of our financial system. It will collapse if another sucker does not step up to borrow some more money that the previous debtors can use to repay the interest.

      That is the system must be expanded in order for the money to be available to pay the interest on the previous loans. This works well for awhile. After a time the amount of money borrowed and being paid back takes the maximum out =of the income of the borrower. This leaves much less to spend on goods and services.

      So now we are blessed with economic expansion as the early birds borrow. Later there is little stimulus as the accrued debt bites and even later there is so much debt there is a negative impact to the economy because of the accrued interest.

      We have reached that stage. Previously described as debt suffocation and interest strangulation.

      It means that the production of new money can not cease as the financial system will immediately collapse as interest rates surge and bankrupt everyone with a loan.
      But continuing the production of money has to be as ever increasing velocity. This will delay the collapse to the future but not avoid it. The collapse will be the wrse the longer it is delayed.

      The collapse id inevitable as taught by the Austrian school.
      ALL BOOMS BASED ON CREDIT (BORROWED MONEY) FROM A FIAT DEBT BASED MONEY SYSTEM WILL INEVITABLY RESULT IN A CORRESPONDING BUST.

      There is no escape from this regardless of regulation. True the derivative games will make things worse.

      There has not been one regulation worth its salt that has been enforced. Part of the corruption is the complicity of enforcement agencies, government and big business. It is called Fascism.

      None of this is Austrian.

      I am going to post an open article below as I can not find a link. It is worth the read to realized how rotten and corrupt the who process is.

    • Regulation only works if the regulations are enforced. This is not happening. The regulators are complicit in the corruption and lack of enforcement.

      The only regulation required is one that combats thieves and crooks. Regulation to prevent manipulation. Our manipulators and crooks are the government, regulators and insider corporations.

      Regulation should enhance agreed codes of conduct.

      As a sailor I go sailboat racing. There is a code of conduct and rules of racing manual. This is reviewed every 4 years and revised according to submissions made by participants.

      Enforcement is by the participants. There are no regulators. Locals draw up committees to review infractions. The individuals agree to be bound by these decisions taken after the arbitration process.

      This works generally very well. Surely other facets of life can be similarly arranged. There is little difference in the elite events compared to the local club event. If one does not agree to the rules one does not get to play. If one agrees to play one gets to influence the rules of the game.

      This is a self regulating process.

      The only regulations we need in business and monetary/financial affairs is to allow all access and to have the rules enforced by the players. In a business one makes it a success or one does not. No bailouts allowed, no special privileges allowed, No special advantages.

      Let the banks go under.
      Repeal the central banks charters.
      Ban fractional reserve banking.
      Repeal legal tender laws.
      Get rid of the fiat money debt based currency.
      Replace with free unencumbered treasury bills backed by the assets of the state.
      Repeal odious debt.
      Pay off all other national debt with treasury bills.
      Remove income taxes.
      Monetized silver and gold coin as a legal tender.
      Allow people to use whatever money they wish that best suits them.

      There is more deregulation in the above than regulation. But like in the sailing arena people need freedom to act and modify activity in the financial arena, and be self regulated between the agreed rules.

      • joe hack

        @Tony Brogan, Oh Gosh! Oh My!

        “Regulation only works if the regulations are enforced” ‘Au contraire, mon frère – ‘apparently enforcement is not needed in sailing’ I hear? So from this logic one it is suggested a free for all ,sort of, but then it follow with simplistic menu of selected rules, sort of, what follow if suggested menu needs adjusting, a lager menu, if so, or even if not so, apparently “Regulation only works if the regulations are enforced”.

        Comparing the self regulation in a minority sport as overseen by the competition entrants , public audiences, and adjudicators to the world’s financial institutions and back street speculators in darkened rooms… demonstrates the naivety of Tony Brogan manifesto for a ‘new world order’.

        A naivety mention here before…

        Even in a populist sport such as soccer, in front of tens of thousands of onlookers as well up to hundreds of millions of TV viewers worldwide and all this with a referees assorted coloured cards to hand Thierry Henry scores Gold with the “hand of god” … Or was it Ben Johnson that got the Gold, maybe it was the king of the ‘Austrian School’ of cycling Lance steroid strong?

        Cheaters, cheaters destroy trust, no matter what the sport but the affect in the ‘sporting -sailing -economics’? causes much more damage to billions of lives than an unsporting cheat might at sailing?
        A red card for Tony Brogans “new world order” a primitive cave mans manifesto that might be sanctioned by – ‘El Jefe’” – Trujillo himself.

        A free for all is a primitive type of economics imposed by a bunker mentality at an outpost on an Austrian Hillock – A bunker down to a ‘Tea Party’ at the mad haters with the company Sarah Palin and her assault rifle – can you see the Russian from where you are Tony.

        Tony, I am not feeling the love anymore.

        • Sailing rules are rigidly enforced by the participants.

          If the same applied in our daily activities we would not allow the lying cheating ones to get away with it.

          but when the regulators take no notice of the people then the corruption includes those supposed to care for the proper process. We have that now in spades.

          I’ve said it before, being snide and personal does not add to the discussion.

          • joe hack

            “I’ve said it before, being snide and personal does not add to the discussion.”

            Sory El Jefe but i don’t play by you rules and so since their sre no rulle in your world their ait anthing you excet become a dictector El Jefe

          • joe hack

            “If the same applied in our daily activities we would not allow the lying cheating ones to get away with it.”

            “If” does run a country

          • joe hack

            “If” does not run a country

        • joe hack

          “I’ve said it before, being snide and personal does not add to the discussion.”

          Sorry El Jefe but I don’t play by your rules and so since there are ‘no rules’ in your world, there nothing you can do except become a dictator.

          I will be on the opposing side and there are many other factions you need to be wary of too.

          Your are either naive or disingenuous but certainly your view myopic, child – baby doc

          A good heart does not rule millions – he nice but I don’t want him running a country…

          “An economist is a person withe 101 ways to fix a economy but he does not have the girl”

  28. Found a link so here it is Especially for you Mr. dwalsh. Hope you read it.
    ———————————————————————
    When Bad Government Policy Leads to Bad Results, the Government Manipulates the Data … Instead of Changing Policy

    Washington Blog

    http://www.washingtonsblog.com/2013/07/when-bad-government-policy-leads-to-bad-results-the-government-manipulates-the-data-instead-of-correcting-the-policy.html

    “The Core Problem

    Corruption at the top leads to lawlessness by the people.

    But – while conservatives blame the government for our problems, and liberals blame big corporations – the core problem is the malignant, synergistic intertwining between the two.”"

    ————————————————————————

  29. http://www.bullionbullscanada.com/intl-commentary/26291-london-metals-fraud-revealed

    Jeff Neilson—”As global power (and wealth) continues its inexorable march from West to East; the (bankrupt) United States of America, “world’s only Superpower”, will be isolated and left behind – as some rotting, Third World, Gangster Regime. All courtesy of the One Bank.”

  30. Paul Divers

    ‘Drive-by’ valuers spy on distressed homes

    http://www.independent.ie/irish-news/driveby-valuers-spy-on-distressed-homes-29470835.html

    The Celtic Dream has turned sour.

    • Paul Divers

      The head of AIB is spreading the mantra that people who are in arrears are ‘strategic defaulters’. He is on safe ground and is just feeding into the Irish psyche

      I know of a family in Dublin where they manage to pay the small mortgage but are afraid to open the door due to the state of the place. No carpets, curtains and no door on the oven. It’s worse than bad believe me

      Another is a lawyer with two kids and she defaulted. Being called a ‘debt dodger’ by her friends and family

      No place like home huh?

      • paddythepig

        Did the lawyer with two kids ever consider buying a house he/she could afford?

        Paddy loves a freebie. Open a free bar, and there will be a stampede.

        The allure of getting everyone else to pay for some of your gaff is just too alluring for the Irish cute hooer.

        The so called professional classes have jumped on the bandwagon now, strategic defaults appeal to their sense of entitlement to live in a certain type of house in a certain type of area. Their inner snob can’t contemplate living within their means.

        • Paul Divers

          I notice you took the bait and went straight for the lawyer.

          I don’t know how much she paid and it’s none of my business.

        • Paul Divers

          Bought at the height of the boom and in the last couple of years split from husband and had her hours reduced to part time. Wants to pay but can’t pay.

          • paddythepig

            So would she live in a two up two down in a modest area? How about a 2 bed apartment somewhere?

            Lots of other people do.

            If she can’t pay, time to trade down to something you can pay for.

          • Paul Divers

            Thanks for all your kind help Paddy. I’ll pass on the advice :-)

      • paddythepig

        What happened the door on the oven?

  31. Dorothy Jones

    Hail the gold troll twat, caveat emptor to those who pretend but have not.
    Idiot.

  32. joe hack

    @ Tony Borgan, The follow is very sad event which demonstrates the importance of human nature and it’s affect on peoples in all walks of life not just sailor as you alluded to above but all peoples including people in the money business.

    “Donald Crowhurst
    The 36-year-old sailor set out from England in a plywood trimaran as a competitor in the 1968 Golden Globe round-the-world yacht race. Though he had little prior experience and his boat, the Teignmouth Electron, was frighteningly under-built, Crowhurst managed to convince a wealthy backer, race judges and the media that he was a serious contender.

    He wasn’t. After several weeks fighting leaks and making slow progress, Crowhurst began sending bogus radio reports indicating amazing success. At one point, he claimed to have covered 391 kilometers in a single day — a world record, at the time. In reality, however, Crowhurst had sailed off the route to the coast of South America, where he decided to lie low and wait for the other competitors to come back around. He spent 111 days in radio silence, then called in and reported another bogus position behind the race leader. But when a competitor sank trying to “beat” the Teignmouth Electron for second place, Crowhurst was overcome with guilt. He confessed all in his logbook, then stepped over the side and vanished into the Atlantic”

    • The Strange Voyage of Donald Crowhurst.

      I have read it twice. Crowhurst kept two log books from the start of his deception. He also planned his time of departure from the boat into the ocean 3 weeks before the event.

      A Dr Faustus story for sure. Crowhurst still sailed over 11,000 miles and had repairs effected in Brazil.

  33. dwalsh

    Hi Tony

    My point was and still is that the ideology underlying the rampant deregulation of recent decades is rooted in the Austrian School…not in Keynes. I think this is simply true.

    (note I wrote ‘rooted in’)

    The men who drove it were almost all devotees of Mises and Hayek and radical free market ideology – for instance Greenspan.

    Now you may argue that many aspects of Fed policy conflict directly with the pure Austrian School; and I agree with you. For instance QE; which is Keynesian.

    We have Keynesian stimulus for Wall St; and Austrian austerity for Main St.

    My point is that the ideology underlying the neoliberal thrust of current national and global economic policy is rooted in the radical free market economics of the Austrian School; and Austrian economics was and still is funded and promoted by capitalist elites.

    The impression I have from people of your persuasion is that Austrian economics in its pure form has never actually been tried; and what we have today as neoliberalism is not Austrian.

    It might surprise you to hear I would agree with that too.

    I wrote ‘rooted in’ consciously because I know what is unfolding is not pure Austrianism.

    I am however still convinced Austrianism is the entirely the wrong way for humanity to go.

    You also argue that in saying that the ideology underlying the rampant deregulation of recent decades is rooted in the Austrian School, I am not dealing with a lot of other issues which you list; and I agree with you there too.

    I do have opinions on those issues too Tony; but I wasn’t referring to them.

    I do hope you are not suggesting I not comment on some issue unless I also provide an omnibus theory of everything along with it?

    • You are a thoughtful person and as I have noted before we agree on most things.
      The mistake is to put things in boxes with labels. so saying something is this or that is often fraught with paradox. Today it was suggested by a friend that I was a Red Tory. Someone described as having conservative fiscal and monetary policy but in social policy on the left. So work that one out!!!!

      Better we describe what we like or dislike and the reasons for it rather than say we agree with this or that position as announced by the philosopher of the day or the in fashion economist etc.

      I accept that you have opinion and that is no problem . I am happy to argue the point rather than the person.

      Take care

      • dwalsh

        These ideological labels have only a limited use alright; but a use none the less. The way things work in reality is never quite what rational theories imply. Rational systems dont fully map onto empirical reality.

        Anyway more anon. All the best.

You must log in to post a comment.
× Hide comments