April 7, 2014

No country for young buyers

Posted in Behavioural Economics · 62 comments ·

The frenzy has started again. Six years after a property boom practically destroyed our economy, we are at the same nonsense again. When are we ever going to learn that buying and selling over-priced houses to each other is not going to make us rich, but will make us poor?

At the moment, there is no credit in the system and no leverage, but this won’t last. Credit will find its way back into the Irish property market in time and then we will, yet again, take our seats in the rollercoaster, with predictable results.

All week, I have been subjected to relentless propaganda by the usual coterie of property pornographers suggesting that the frenzy is normal. It is not. No other European country destroys itself with such regularity, bar the British – and even they don’t do it like we do.

Today’s mania has been fuelled by two myths. The first is that there are loads of young people looking to buy homes in Dublin now. The second is that the young population is growing.

We are told there is a massive demographic bulge emerging of young people, particularly in Dublin, who needs thousands of new houses and apartments. This contention is taken as gospel and repeated by newsreaders and producers of radio shows and in no time people are queuing up to buy houses – this time with Mummy’s and Daddy’s money.

Well, can I tell you something?

The population of the crucial demographic between 19-34 actually fell in the last census. Not only is the population not rising, it is falling in the capital. Look at chart one. This shows you the change in the population in Dublin between 2006 and 2011 of the critical age cohort 19-34. In 2006, it was 521,000 and more importantly it had been rising very rapidly. These were the Pope’s Children cohort, a reflection of the baby boom of the late 1970s and early 1980s.

 Dublin Population

Now look at the figure for 2011. The population in the city of 19-34 year olds has actually fallen by 5,000, not by much, but it has fallen. Where have they gone? Many have emigrated and also there was a dramatic slowing of the baby boom by the later 1980s – itself, a function of the 1980s emigration surge in people in their 20s.

So myth number one is not true. The population of ”twentysomethings in Dublin is not growing, but it is actually falling or at best it is static.

The second myth is a more general yarn, which contends that Ireland has a massively young population coming up behind us that will need lots of houses and apartments in the next few years when they move out of home.

This is also not true. Have a look at chart two. It shows you the Irish population pyramid and it reveals what anyone who has been looking at birth rates could have told you. There is a dramatic fall-off in the population of teenagers and early twentysomethings in Ireland.


Look at the pyramid. You see the population bulge in 2011 was in the 30 to 34 age group. These people are now heading towards 35 now on average. Behind them, the population falls off quite sharply. So, for example, there were 420,000 people aged between 30-34 in 2011, but only 300,000 odd between the ages of 15 and 19. This is a difference of 120,000 and this is a substantial figure in the context of the housing myths.

Adventurous people

The reason it is substantial is because these people who were between 15 and 19 three years ago are not between 18 and 22. This is the time the more adventurous people begin to move out. In time most, but not all, of them do. A few years later and they will begin living with their girlfriends or boyfriends and they will begin to nest.

Nesting drives the economy because people tend to buy stuff they had when they lived at home. So rather than one kettle there will be two, and two sofas and beds and fridges. The parents keep their room, with the bed made, but they have moved out and are buying stuff for themselves. This ”nesting is what drives consumption of ”big-ticket items, queues at the check out at Ikea and retail sales all over the developed world. It is also what crucially drives house buying.

So the demographics are telling us that we will have as many as 120,000 fewer people moving out of home and looking for a place to live in the next few years than we had in the first years of the century. This is a huge issue for a housing market whose pornographers are painting a picture of hundreds of thousands of new twentysomethings hanging out in town, looking for place to live and party.

The truth is that there will be far fewer of these types of Irish people out there then there were ten years ago. So unless we are going to see a policy of forced repatriation of over 100,000 people aged 20 to 25, where is the demand for housing going to come from?

This leads me to what is happening now because the price rises in Dublin and other urban centres are real. Indeed, despite the analysis of demographics, I think house prices will continue to rise because what is happening this is a form of savings or pension fund provisions for rich middle-aged people.

The cash buyer is the buy-to-let player of a few years, except he is doing the buying without a mortgage. He is taking his wealth out of the banks because the banks are yielding nothing on his savings and he is buying a house, playing the capital appreciation game, paid for by the renter who is priced out of the market by the guy who ends up being his landlord.

On Thursday, the ECB softened up the ground for zero interest rates in Europe. This will drive more money out of deposits. This could ironically cause mortgage rates to rise (not fall) in Ireland as the still bust banks try to make money on lending.

This process will drive an even bigger financial wedge between the first-time buyer and the old cash buyer, exacerbating the sense of a housing crisis, when there needn’t be a crisis at all.

Ultimately, in an environment of zero eurozone rates, new credit will come in as it always does and we will be off again into bubble territory. Except this time we won’t even have the demographics to support it.

We’ve been here before. We know how this story ends.

David McWilliams writes daily on international economics and finance at www.globalmacro360.com

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  1. atchman


    How do you make the assertion that bank lending for mortgages will increase? QE? In the US, we had massive QE programs but the money didn’t flow to Main St.
    Also, prices have begun to fall in Dublin (according to the CSO), granted only for two months, but FTB’s are getting priced out and perhaps we have some ‘cash buyer exhaustion’ – we could be looking at the end of the echo bubble in Dublin already.

    • McGoo

      Good post, which took me to the CSO website, where I saw this chart :


      I’m no chartist, but that certainly has the makings of a textbook bull trap. It should be clearer in a couple of months.

    • CorkRob

      Didn’t you see DNG and DAFT last week telling us all the Dublin property was gong up by €5,000/month or 18% a year – and it got huge coverage in the print media (Now they surely wouldn’t be just hoping to fester their own nests by telling porkies , would they ?).
      The print media are as much to blame as the Estate Agent Pornographers – they’re hoping to once more fill the now empty pages of Property Advertising supplements with bulging adverts full of Armageddon predictions for reluctant buyers – “BUY NOW or Never be able to afford it”.
      Whatever happened to all the unfinished NAMA developments in the Capital ?
      Surely not Everyone wants to live in South Dublin !!?

  2. Moon Wobble

    Tomorrow ………..is the 7th Day before the ….Moon Wobble…Full Moon ….Blood Moon ….and …Feast of the Passover …..and all of this Peaks ….on the 15th April .

    Remember last months 7th Day warning ….the Flight Plane disappeared and still has not been found…..and its flight number was 370 .


  3. aidanxc

    Good article David.

    If the government (and main stream media) were to look at Maslow’s hierarchy of needs they would see that our most basic human requirements are Food, Water, Shelter and Warmth. Government policy is ostensibly focused on keeping Food, Warmth (energy) cheap and, until recently, Water free. They would not countenance, nor would the media, the idea of people profiteering on such a fundamental human right as water. Nobody would cheerlead some guy who bought 10,000 gallon of water just to sell it on to someone in need at a massive profit. Yet such people were the poster boys of our recent boom albeit for another basic human need: property.

    We need rent controls and an end to property speculation. If people want to invest let them invest in innovation. Property speculation and its cheerleaders is symptomatic of a populace who do not know how to create wealth other than take it from other people.

    • Deco

      There is a lot of truth in what you say.

      The water business, is going to be a massive headache in years to come.

      Water has absolutely nothing to do with the recklessness and stupidity that prevailed when cocaine riddled bank executives where flying in builders helicopters to watch premiership matches during the boom – shortly before they signed over massive loans to the same builders who were flying them around for “sport”.

      It is now much worse than policy error – it is verging on political criminality.

      Can a town like Naas offer to form a co-operative and buy their own water system ? I suspect that in a large centre like Dublin, such a system will be abused. But in a smaller centre, it should possible.

      Presumably this will NOT be an option. There will be no profit in such a co-operative venture. There will be no price gouging. And there will be far too much transparency.

  4. Locutus

    It’s not speculation that’s the only driver – at the end of the day it’s basic supply & demand of a scarce resource economics. It was always the availability of finance that drove the market – this time around there’s restricted supply in the areas that people want to buy. The lead-in time for new demand is very slow – the only question is whether or not this is a mini bubble or a sustained increase…

    • aidanxc

      We have tolerated and encouraged a wild west approach to the provision of one of the most basic human requirements. It is not just about supply and demand. It’s about regulation or rather the lack of it.

      The lack of regulation of housing (planning, taxation, renting, pricing etc) has turned houses/accommodation into a commodity rather than a human right.

      We wouldn’t tolerate speculation and the gazumping of medical care, water etc but for some reason it seems to be acceptable for housing.

      We need to strictly regulate the provision of housing, so that only long term investors such as pension funds (who are happy with a 3-4% return per annum) get involved in it. Having Gordon Gecko-type parasites involved in the provision of this most basic of human necessities is an abomination.

      • Locutus

        ok – take this scenario. Some form of regulation is introduced to cap the price of properties. A house becomes available, with 4 couples interested. How do you select the successful couple? You can’t use price as a selection criteria.

        • aidanxc

          Do like in Sweden – you put your name on a list. The list is controlled – you can’t put your name down for every property etc. It works.

          • The problem is the access to credit, that’s the central theme of the article, and its what causes the prices to be driven up and is the primary proximate cause of the destruction of the Irish economy. So you deal with that.

            As suggested some years back by our host, you put a cap on the value of a mortgage that banks are allowed to lend. Take a rolling average of the value of the property for, say, the last ten years and set that as the maximum level of mortgage that a property can be secured against That caps the amount of debt a bank can issue without getting in to the messy business of lists and trying to control prices. And ban 100% mortgages. Simples.

  5. Colin

    Hi David,

    Great article, but you forgot to mention the government/bank policy of Socialism for the rich, which means those living in South Dublin who no longer pay the mortgage are being allowed to stay in-situ, without any threat of re-possession, which lowers supply to the market, which puts up prices.

    Hats off to Adelaide here a few weeks ago for a great post.

    *** ——- ******
    March 4, 2014 at 10:12 pm
    Hi Tony
    Talking of manipulated data there was an economist earlier on the radio discrediting today’s press release “Central Bank shows 3.3% decrease in mortgage arrears” baloney re

    What the CB failed to mention was that 3.3% decrease was due the banks offloading non-performing mortgages to third parties from their books, yes, the true headline should read “Central Bank shows 3.3% of mortgage arrears were removed the banks’ books”.
    To imagine that there are now 33,589 mortgages in arrears of 2-years-plus and how many properties were repossessed in the previous quarter? 168. A whopping One hundred and sixty eight.
    Socialism for mortgage holders, capitalism for renters.

    **** ——- *****

    Care to comment about this David?

  6. McGoo

    Looking at that population pyramid, it screams “No State Pension for Me!!”.
    I’m 47 years old. If I retire at 67, I’ll be depending on middle-aged working people to pay my state pension – and there obviously isn’t going to be enough of them to support all us oldies.

    • Deco

      You have the option of saving for your retirement, and thereby cutting out the nonsense factory that is the pensions “industry”.

      But Baldy Noonan does not want people to save. He just wants you to work, and have nothing at the end of it.

  7. Napoleon recognised the needs of his wounded and sick soldiers after war and when they returned home to France with nothing . He knew that they could not get a bank loan or have funds to purchase a house and that they wanted to live in the place of their childhood dreams . He acknowledge all of that yet he wanted to reward them and this was another challenge for Napoleon on his home turf .To show that he remained a true leader acted on the Codes he had being building up all along and devised a new concept — VIAGER —- This allowed his soldiers to do many things not possible up to then and eliminated the need for Banks and unnecessary charges .


  8. Bamboo

    Thanks to all for great comments and David’s article.

  9. Bamboo

    Up till now the trend was that the children leave the nest and buy their own house including all the bits and pieces for the house. Most parents help their children in getting their own household up and running by helping out with a fridge, washing machine and other smaller investments.. The parents then remain in the family home which, most likely fit a big family comfortably anyway while the children buy smaller starters home. These parents are also most likely mortgage free and not spending any more money except on their “independent” children. Other than that these parents with either their salaries or pension income don’t really know what to do with their money. Meanwhile they live in their house that is far too big for two people. I am sure many of these parents would think of selling up and scale down or go abroad where money (euros) last so much longer than at home in Ireland. Moving abroad is no good to the housing market because the equity that they sit on is not going anywhere so the market come to a stand still.

    Now the property pornographers is targeting these parents who the market think can do with releasing equity on their property. So rather than spending it on smaller bits and pieces for children why not sell up and “really” help the children.
    This is an old strategy that they took out of the drawer from around 2007/2008. We’ve already seen this type of practices just before the crash. The property pornographers (PPs) have been very active between 2007 and 2008. During that time, banks with their TV ads were targeting parents to help their children to get on the property market. These ads are aimed to put the guilty feeling on the parents. Also during that time I haven’t heard any revolt against these practices of the bank and PPs. The crisis put a spanner in the works for these practices.

    So now it is targeted not only at the young generation who’d like to get on the property ladder but at parents and their children. The two generations are now a single target unit.

    Obsession with property is exactly the same as obsession with fashion, to look good and beauty cosmetics. Like the cosmetics industry that can sell you anything PPs can implement the same market strategies. This time it is targeted at the family unit.

  10. Daithi7

    Hmmm, great article, thought provoking but as to its consclusions not at all sure: Why?
    1. Whilst the population in the 20-34 cohort are not growing as quickly as before there are still more of them coming on stream than appear to be leaving the housing market, so yes a lower rate of growth, but net growth is still surely a net driver of housing demand and hence prices (subject to supply,etc)

    2. the 20-25 and 25-30 cohorts are significantly lower than previous due to emigration in the last few horror years, but with a growing workforce at the moment, what would the potential rebound effect of some of these wild geese returning to nest (as happened in Ireland’s last boom). I mean Ireland may be poor but its a great place to live!!

    3. The economist has Irish property prices at about fair value v rents at the moment(Jan2014) but about 15% below fair value v incomes, so say 7% below fair value. That is some margin of safety in most areas.

    Don’t get me wrong, I’m not going to turn into a promoter of our crack cocaine like addiction to property (me included btw) but nonetheless I feel there is probably a lot more indicators to indicate this is indeed a property market bottom. I don’t predict nor want to see a market rising like before but hey… what the hell do I know- its the Irish and property we’re talking about after all :)

    • atchman

      Factor in interest rates and asking prices are already back to boom levels, same tosh as before being peddled in the NM, same actors and same ole script. Such is the nature of echo bubbles rise faster collapse quicker.

      • Daithi7

        I don’t understand that Atchman, say prices are approx 50% below peak, how does that equate to bring back to boom time prices?

        P.s. as I say the economist magazine has the Irish property market at about historical averages v rents, and about 15% below value versus earnings. So with interest rates looking like they’ll stay low & Ireland’s macro picture seemingly improving by the day (literally) that would seem to indicate to me that houses in residential areas are likely to recover back to fair value at least, while maybe renting accommodation like apartments say are roughly around fair value, so should just rise with cpi, net wages, and other economic measures.

  11. Deco

    That article has “wake up call” embedded in it.

    The one dynamic that is outside of the article is the “tech sector” boom in Dublin. Compare Dublin to Waterford, Drogheda, Dundalk or Navan and you get an insight into the role of tech in the Irish housing market. Medium sized population centres are not moving anywhere, in terms of real estate valuation. That is the real state of the Irish economy.

    There are two factors influencing incomes in Dublin that are based on capital inflows that are not sustainable.

    1. State borrowing. Very few quangos outside of Dublin paying Angela Kerins scale wages. And the banks, NAMA, and the professional class that benefit from state borrowing are not located outside of Dublin. Buyer behaviour for property in Blackrock Co. Louth is very different to buyer behaviour in Black Co. Dublin.

    2. The Tech Bubble. Facebook declined 20% from it’s March 20th peak. Twitter is down. So are many others. In the last tech boom, it was all about hits. Now it all about members. Neither is an accurate measure of either current revenue or projected revenue. And like the last boom, “projections” seem to be everything. The social media sector is deflating in a repeat of the Dot Com bust. There will still be software, but the chancers need to be weeded out from the wheat. This normally happens after a prolonged decline in valuations. Tech investment in Dublin is being powered by stock market investment in the Nasdaq, and not by the revenue from social media corporates…BECAUSE…THE social media has very little Revenue to sustain it. In fact in the case of some of the new media companies, there is NO revenue.

    Where is the monty going to come from that will prop up Dublin’s real estate mania ? The social media companies are bleeding cash. There is a term for this. It goes back to the Dot com mania. It is called “burn-rate”.

    Then we have property sector participants pointing to Cork as evidence that there is a boom outside of Ireland. Actually, Cork is different because of pharma, a different tourist market, agriculture, and returning Cork people. Pharma did not get hit my the recession until the patent cliff started. Likewise agricultural production in the southern third of Ireland climbed upwards, while it has stagnated in n the east of Ireland (because of the crowding out effect from the real estate in the eastern counties). And lastly tourism on the South coast is related to income levels in the SE of England (which are in better shape than they are in Ireland itself). And of course the debts in Cork were never as extreme as they were in the eastern counties. Lastly there are people in Cork living in Dublin, who want to quit Dublin, and who have got over the hard part of their career and who want to go back to Cork for economic reasons.

    The “Cork theory” explaining why Irish real estate can go up outside of the DART line belt, is not understood by those who talk about. Deliberately so. Incomes in the SW have no relation to incomes in the East, any more than incomes levels in Eastern counties are are related to income levels in Connacht (all of which is closer to Dublin than Cork incidentally, and much more depressed than either). Of course, understanding what is happening undermines the entire “rising tide lifts all boats” BS.

    Once again, the auctioneering profession, and the banks are on the search for suckers. And young people are more naive, and suitable for suckerdom than those who have knocked about and figured out about life. And their parents gets sucked into it, because their parents escaped both the mania of the 1970s and the period from 1998 onwards. In other words the auctioneers are looking to scelp those who did not get scelped yet.

    The national financial balance sheet has been deteriorating since 1997. We see this in the scale of the debts to be repaid. There has been NO attempt to fix the national balance sheet. In particular the decision to bail out private sector losses with public money is perhaps the most stupid policy decision in the history of the state. Lenihan was instructed by countless economists (including David) to negotiate a haircut on such interests. It is called capitalism. It does not require explaing to the EU Commission. Even the IMF were in favour of it. Ireland balked and got a social media boom in return. The boom is about to end. The debts remain. The three EU centric parties in Ireland are now suffering in the poll, as a result of their willingness to obey the dictat coming from Brussels and Frankfurt.

    Likewise the labout market is still highly dysfunctional. We only have to see the numbers of people leaving Ireland to see that. The entire tax system now comes to bear on the labour force, either directly or indirectly. As a result a lot of the vounger people from about 20 counties and Dublin’s Northside are trying to make money abroad. Those most likely to make money (in Canada) are unlike to come home. Those least likely to accumulate any savings (in Australia) will show up again, after benefitting from an experience that in many cases makes them less employable rather than more employable in the Irish market.

    And then there is the country’s leadership. They really are befitting that of a banana republic. The current Minister of Finance has failed in every single high profile responsibility placed upon him. And he is about to do it all over again. In particular his eagerness to drive down bond yields and make a profit for speculators, whilst exposing Ireland to possibly not having enough debt (to think that this would be the one area where the leadership would should caution), as we fast into an economic crisis is astounding. Bond yields in peripheral Europe are about to go up again. And Noonan has not fixed any banks. He has not fixed any of the state expenditure racket.

    In fact Noonan even raised the DIRT tax so as to encourage a deposit flight to happen faster, if there is ever a hint that Ireland’s debts might become too great.

    All that is missing now is for Enda Kenny to the EU Commission President, so that the whole of the EU can share in all of this wholescale ineptitude. It is most fittng that they should. EU policy since the Treaty of Maastricht has been one long convoluted series of blunders, mistakes and errors of judgement. In fact centralised decision making has proven to be a disaster. Unfortunately, it is too obvious for our “leadership” to see that is it. Far too obvious.

  12. Deco

    At some point in time the entire SCD real estate thing will fizzle out, and be seen for the nonsense that it is. It is not Southern California or Florida. The weather is better in Wexford, and in winter time along most of the south coast.

    It is purely a variation of status obsession.

    It reveals deep psychological obsessions, and needs.

    In Ireland, there is a deep connection between real estate and status, and the right to feel good about oneself. It goes back to the “good room theory”. And an obsession with external status, even to the point that it undermines the real conditions. It is the antithesis of common sense.

    Willful waste, makes woeful want – the phrase that has encapsulated Ireland since about 1987.

    • Deco, the real question is – why are people like this?

      Can’t they think for themselves?

      • Colin

        They love being part of the herd. There is great comfort in being a herd creature, if that’s what you feel more comfortable doing. They can then climb the herd hierarchy, and watch other herd creatures become envious of their status and mobility. They thrive on watching the others become envious of them. You also see strange codes of dishonour, almost like a mafia. That’s why you hear people defend the indefensible, like CJH, Bertie or Lowry, their response to anyone who criticises their herd leader is ‘sure you’d do the same if you were in his position’. It is unique to Ireland.

      • Deco

        Good question – why are people like this ?

        I suspect a lot of it has to do with the topics covered in the documentary “The century of the self” by Adam Curtis.

        There is massive societal induction, from business.

  13. Kev


    Full Reserve Banking and Land Value Tax reforms would probably fix this problem.



  14. michaelcoughlan

    “This leads me to what is happening now because the price rises in Dublin and other urban centres are real”

    So much for the nonsense about deflation because rents are skyrocketing also.

    “When are we ever going to learn that buying and selling over-priced houses to each other is not going to make us rich, but will make us poor”

    You miss the point there. Further down the article you identify cash buyers as the culprits for driving prices. Probably correct. You suggest that they are in it for the capital gain. Maybe not. Maybe we are back in the 1800’s where the property is being controlled by the landlord and he is a rent seeker rather than a property flipper. If he is not forced to sell the asset he can choose the time he exits meanwhile he has an income when he is getting nothing on savings and the stock market is an out of control gargantuan bubble about to blow up in the face of the head case intellectuals who think their policies are workable. Ireland is going to go like France except without the controls. People are going to have to rent for all their lives as property will simply be unaffordable. The only way to solve the problem is to increase supply.


    • Colin


      Our pensioners cannot take their houses to their graves. Our pensioners do not rent. They pass on their properties to their children or nephews/nieces. People who know they will eventually get a share of a property will not have to keep renting indefinitely. All they have to do is bide their time. Family sizes have been smaller than traditionally large ones before 1970, so most people only have 2 or 3 siblings. Many siblings have since emigrated, and find life much more enjoyable and fulfilling on foreign shores, so that rules out some siblings shares, leaving more of an inheritance for those who are waiting for it.

      So in summary, we do not need a lot of new houses. However, we can see a lot of renovations of new houses, which is a different thing and far less costly than a FTB mortgages.

      One for bonbon; the Brutish empire has handed Ulster Bank €18bn to deal with the fallout from the Irish property industry.


    • tim1234

      Yes it does seem that more people will probably have to rent forever. I’d be quite confident betting my money that our home ownership rate of around 75% will move close to the eu average of around 60% -(roughly 300,000 more homes rented than current half million). Believe it or not we are actually a rich nation with a high gdp per capita (yes a lot of MNCs here) and the other rich eu countries of western europe do not own their homes as much as us.

  15. Adelaide

    Declining Population: I was working in the border counties post-Christmas Louth-Monaghan-Cavan, and it was sad and a genuine shock to return to towns I’m fond to see them in such miserable state. Talking to locals, the cause is the birth rate. The border counties were always employment black-spots and emigration was always high so nothing has changed in an economic sense to explain the demise of these towns. What has changed is the end of the ‘big family’. No more 6-9 children families. The locals would describe family cars brimmed to the full of kids spilling out for Sunday mass. And there’s the clue. The end of big catholic families and the debasement of money. No man (or woman) today can afford to run a car and 6 kids with stay-at-home mother/father on a single wage. The towns are emptying and now more resemble retirement villages, except when this older generation passes on there will be no generation behind them. Empty homes without any takers. That makes for empty towns, and then what about the roads connecting them? Fall into disrepair? I think it’s inevitable our country will be dotted with midi-Detroits. As David has said many times, “An economy is the interaction of people.” No amount of nostalgia will defy this stark reality… And then to hear about house prices rising due to a REAL demand and all that blockhead nonsense, good grief!

    • Deco

      The great irony of it all is that debts are under control in such regions. Incomes are rubbish. Also the local economy is a long term contraction due to oligopolistic practices in large segments of the Irish economy.

      Counties Mayo and Sligo are already further “down the line” on this trajectory than Monaghan/Louth/Cavan.

      Sligo is actually dying. Leitrim has already died. Mayo is also dying. And parts of Galway. The Taoiseach represents a county that is dying. This optimism stuff that he peddling is falling apart under his own nose. In Galway beyond 15 miles from Galway city, there is an economic desert. The Tanaiste and his wife own land in this emptying out declining zone.

      In what must seem like an astounding paradox, the wealth of the area, is pumped under the feet of the locals, in a dubious manner, with the people getting very little due to the political gombeens in D2 requiring that Ireland is low tax competitive – so that they can get a pat on the head from multinationals who exist to maximize profit regardless of the societal consequence.

      Mrs. Thatcher stated that there is no such thing as society, in the 1980s. Ireland in the 1980s had a societal concept. But since the PDs (as IBECs political sentries) got into power, societal concepts have been gradually dismantled. The benchmarking deal from the ICTU was a knee jerk reaction, that amounted to buying off public sector unions, so it would not be worth their time to protest. The rest of society continued to get shafted.

      Ireland’s societal concept is finished. Crime, corruption, debt, media lies, political collusion, nonsense from Brussels about society while the people get shafted to please lobbyists, bailouts for the rich, alcoholism, substance abuse, spectator sports watching, and dubious reports that mncs are almost paying 12% tax when we kow that this is BS.

      And here is the most astounding part….where did the PDs go after the people told them to FO ? some of them ended up in FG, some in the HSE. Now we have Reilly’s new health proposal that will cost an absolute fortune, and deliver the same nonsense. Just more taxes so that the rich get bailed out and working people get sucked to a dried out pulp.

      The Ahern/Harney Borrowing Binge years are now coming at a societal price.

  16. StephenKenny

    At Peter Ustinov put it, an economy based on everyone doing each other’s laundry, at ever increasing prices.

    • StephenKenny

      Clearly, that should have started with ‘As’.

    • Deco

      That would be the entire financial services, and burecratic system.

      Effectively, they are supportive of each other – despite appearances to the contrary.

      They both exist to shave as much margin off the rest of the economy as possible, and then recklessly misallocate nmoney to the well connected, and politically powerful. They fester immoral behaviour, and reward failure.

  17. lff12

    Good article David, and you’ve picked up a lot of truths. What I have noticed, for reasons I can’t share, is that there is a huge bulge in arrears and reposession activity happening at the moment, especially with the smaller banks. The forebearance policy has given in to “get the money in now.” A huge new arrears dept is opening in one of the pillar banks. Another one of the smaller players currently has a very busy arrears department. The pressure is not on anymore to get full payment but to get ANY payment. Agents are phoning up cold looking to talk to the borrowers.

    Whats even more interesting is who these borrowers were: they are disproportionately buy to lets.

    Secondly, I overheard a bunch of legals at lunch the other day and one complained that 250 repossession cases “ready for the bailiff” had landed on his desk. (You hear so much in the coffee shops in Dublin).

    So add these together:
    1. loads of landlords under huge pressure to make payments
    2. loads of landlords at the point of going to the wall

    What do they do?
    1. They twist every arm in the media to generate a mass panic with regard to rents rising and people being unable to get anything unless they pay up now
    2. They force up rents for existing tenants to create economic evictions and try to get a higher paying tenant, because they’re on the cliff edge anyway
    3. They then try to force up rents on the “easier to let” properties in order to compensate for the poorer performers
    4. And lastly, but very critically, they use fresh lets as “evidence” when submitting paperwork to the banks for restructuring to hang on to their assets

    Thats my guess anyway. The unfortunate thing is this is the very demographic group who can least afford to be gouged once more in this way.

    • Deco

      The rental market in Dublin is propped up by incoming workiers in the tech sector.

      Fact : due to tax individualization, they get out after having kids. At that point they are much more experienced, and better able to find work in higher paying regions, and countries where the tax system is more condusive to having families.

      Dublin is becomming a rental market.

      The local authorities are pushing the welfare class out into the midlands, where they are cheaper to house. The sink estates are being relocated to rural villages, where there is less social class snobbery, and where there is really very little work anyway.

      This “helps” drive up property valuations on aggregate in Dublin. It creates a taxpayer funded floor in the midlands.

      To be honest, it an Irish solution to an Irish problem. And it is creating a new series of problems. But the central point is this – we now have social policy being determined by the needs of the housing market. In fact real estate seems to have become the elephant in the room. Actually, I would rephrase that. Real estate is the elephant in the toilet.

      Dublin is becomming a transient location. People work there for three years, and then go somewhere else. It is all brand and no substance. Just about people coming – getting a career shift, and then moving on. The country people of the Western counties, have already sussed out that you are better off skipping Dublin altogether and going to Canada.

      In case some of you have not already noticed.

  18. HenryJames

    0% Interest? Free money then? Are ‘banks’ even offering long term saver account deals anymore? Where you agree that you will get a higher interest return so long as you do not withdraw amd continually deposit a minimum amount for X years?
    Basically can we not have a 2/3 or 4 tierd interest concoction so we all get what we want-Too much to hope for?

  19. There are no unmanipulated markets.All is distorted including interest rates, (housing markets) (Bond pricing) stock markets and all things financial. got to be rid of the system or all this debate on local topics is a waste of time.

    From Lemetropolecafe.com

    It’s rainy and cold this April spring afternoon in Dallas, an area that has become weather jinxed when hosting very visible major sporting events. Three years ago it was the Super Bowl in Arlington, TX, which is right next to Dallas. The snow and ice leading up to the event was so bad it made travel to any scheduled events extremely precarious. Attendance at many of the pre-game events was abysmal. I remember almost knocking myself out just walking into my apartment, as I slipped on black ice. This weekend the same facility in Arlington is hosting the Final Four “March Madness” college basketball championship. Once again the weather is awful. Part of the excitement of the weekend is outside free concerts for the public. They include country singer Tim McGraw and Bruce Springsteen. Both are weather challenged to say the least.

    Why go there on this dismal Sunday afternoon in Dallas? A metaphor can be made to recent revelations in the gold market … that being the recognition of the manipulation of the gold market via the London Fixes for so many years, and the latest furor over Michael Lewis’s new book, “Flash Boys,” … with much of that furor over the catching line, “the stock market is rigged.”

    And that is where the metaphor notion is relevant. So much excitement over the actual mega sports events in the Dallas area, but related events atrophied by weather. So much excitement over gold market manipulation and market rigging, yet ZERO connection to the most important aspects of those two sensational topics.

    Close but no cigar, is all that keeps creeping into my mind. Why? The AM/PM gold Fix issue IS a big deal. It has been articulated by GATA’s Adrian Douglas and James Mc for years, as well as GATA consultant Dimtri Speck who wrote The Gold Cartel: Government Intervention on Gold, the Mega Bubble in Paper, and What This Means for Your Future.

    The financial media babble about whether the market is rigged by high frequency trading is catching and an important issue. But, it is a Mickey Mouse story compared to the real story. The stock market is rigged, but the high frequency trading aspect of it is rinky-dink compared to the real rigging story, one which could lead to a US financial market/economic debacle in the future.

    So to keep this diatribe to a minimum, let’s go to the key points that are not being discussed about who is rigging the gold and stock markets in a big picture sense …

    *When will anyone, including Michael Lewis, discuss how the stock market is managed by the Plunge Protection Team? And what is that?…

    The Working Group on Financial Markets (also, President’s Working Group on Financial Markets, the Working Group, and colloquially the Plunge Protection Team) was created by Executive Order 12631,[1] signed on March 18, 1988 by United States President Ronald Reagan.

    The Working Group consists of:
    *The Secretary of the Treasury, or his/her designee (as Chairperson of the Working Group);
    * The Chairperson of the Board of Governors of the Federal Reserve System, or his/her designee;
    * The Chairperson of the Securities and Exchange Commission, or his/her designee; and
    * The Chairperson of the Commodity Futures Trading Commission, or his/her designee.


    Next stop: the Exchange Stabilization Fund. What is that?…

    The Exchange Stabilization Fund (ESF) is an emergency reserve fund of the United States Treasury Department, normally used for foreign exchange intervention. This arrangement (as opposed to having the central bank intervene directly) allows the US government to influence currency exchange rates without affecting domestic money supply.
    As of October 2009, the fund held assets worth $105 billion, including $58.1 billion in special drawing rights (SDR) from the International Monetary Fund.[1]…

    A change in the law, in 1970, allows the Secretary of the Treasury, with the approval of the President, to use money in the ESF to “deal in gold, foreign exchange, and other instruments of credit and securities.”[5]


    The ESF, along with the BIS in Switzerland, are two of the key honchos in The Gold Cartel.

    Then there is the Counterparty Risk Management Policy Group, which I have been ranting about for a decade+ and yet have never seen mentioned by ANYONE in the financial market media. And who are they?…

    *Improving Counterparty Risk Management Practices by the Counterparty Risk Management Policy Group

    July 1999

    Abstract: In January 1999, a group of 12 major, internationally active commercial and investment banks announced the formation of a Counterparty Risk Management Policy Group (CRMPG). The objective of the Policy Group, whose formation was endorsed by Chairman Greenspan, Chairman Levitt and Secretary Rubin, has been to promote enhanced strong practices in counterparty credit and market risk management. This was to be achieved by building on the self-improvement efforts being undertaken by individual firms in the immediate aftermath of last year’s severe market disruptions, by extending those efforts through collective evaluation of potential new strong practices, by evaluating and proposing improvements in market-wide practices and conventions, and by compiling information on new strong practices and, where appropriate, sharing such information with regulators. This report sets forth the Policy Group’s review of key risk management issues, its evaluation of emerging strong practices, and its recommendations for action.
    The Policy Group approached its work as an initiative by market practitioners mainly targeted at improving internal counterparty credit and market risk management practices.

    *Containing Systemic Risk: The Road to Reform

    *The Report of the CRMPG III – August 6, 2008
    •Full Report [PDF, 592KB]

    ?Transmittal Letter [PDF, 74KB]
    ?CRMPG III Policy Group Members [PDF, 27KB]
    ?CRMPG III Working Groups [PDF, 56KB]
    ?Section I: Introduction [PDF, 101KB]
    ?Executive Summary [PDF, 127KB]
    ?Section II: Standards For Accounting Consolidation [PDF, 85KB]
    ?Section III: High-Risk Complex Financial Instruments [PDF, 85KB]
    ?Section IV: Risk Monitoring and Risk Management [PDF, 149KB]
    ?Section V: Enhanced Credit Market Resiliency [PDF, 141KB]
    ?Section VI: Emerging Issues [PDF, 47KB]
    ?Appendix A: Term Sheets for High-Risk Complex Financial Instruments [PDF, 21KB]
    ?Appendix B: CDO Risk Characteristic (Excerpted From CRMPG II) [PDF, 177KB]


    The CRMPG was designed for a number of the big players on Wall Street to work together to support the stock market at various times.

    A number of those players are also part of The Gold Cartel, discussed in this column for more than 15 years now.

    That is enough for this slow Sunday. You get the message. And someday what a message it is going to be. The free market system in the US is just “not” these days. Normal ebbs and flows, as well as warning systems, have been aborted. As a result, it is likely to lead to sudden financial/economic market chaos down the road, which will erupt out of nowhere. It is only a matter of time.

  20. Economists are largely bought and paid for. “I have seen the enemy and it is us” (them)


  21. Turk: “There are so many economic distortions throughout the world today, Eric, no wonder so many people are totally confused about what to do with their money. The central planners are hard at work pursuing policies that are destructive to markets. They do not understand or are completely oblivious to the fact that their constant interventions are perverting economy activity….


    so when is the acknowledgement of the fixed markets, the fraud and deception, to be discussed , David. when are you going to start educating the people?

  22. “Today a man who has been involved in the financial markets for 50 years warned King World News about a horrifying situation for the West that will also bring the United States to its knees. He also warned the artificial control of markets will end in disaster. Below is what John Embry had to say.”


    How about an essay on the Presidents working group on financial Markets. AKA the plunge protection team.

  23. The housing market and the low interest rate phenomenon is not a local, ut an international problem. Running to australia or Canada is no solution. The monetary system needs changing and to start Ireland should take note of Russia and use its own debt free treasury issued money.

    From David Schectman.

    Jim Willie is one of the most original thinkers in our industry. His newsletters are long and not for the average casual reader, but here are some of his most recent thoughts via an interview with Greg Hunter at USAWatchdog.

    Whole Eastern World Rebelling Against the Dollar-Jim Willie – http://www.usawatchdog.com

    By Greg Hunter On April 6, 2014

    By Greg hunter’s USAWatchdog.com (Early Sunday Release)

    Financial newsletter writer Dr. Jim Willie thinks 2014 will be a pivotal year for the U.S. Dr. Willie says, “We’re going to end this year with no resemblance to the beginning. We spent a lot of years trying to hold this thing together. The whole system broke in 2007 and 2008 with the subprime mortgages. I was saying before that we’ve got the entire U.S. economy depending on the housing bubble and the mortgage finance bubble, and when that breaks, the system is going to break. In the following couple of years, it continued to break. What did we do? We went to zero percent interest rates and made it pretty clear it’s forever. What else did we do? We did bond monetization, QE. I love QE, it makes it sound like CPR. It’s death. It’s hyper-monetary inflation. It’s what Nazi Germany did . . . it wrecked everything. These are desperation measures to hold it together because the system is broken.” Dr. Willie, who holds a PhD in statistics, contends, “Now all the QE and bond purchases are causing some major problems, breaking major economic structures. . . It’s all breaking, it’s all breaking, and they are having a tremendous problem holding it together. Now, the whole Eastern World is rebelling against the dollar.”

    On U.S. sanctions on Russia over the Ukraine crisis, Dr. Willie says, “This is stage two on the sanctions backfire. The first one was the 2012 Iran sanctions. What did that accomplish? They worked with India and Turkey to create the workaround, which is what I call the prototype for gold trade settlement. . . . This is so basic.” The second “backfire” is the recent Russia/Iran deal that trades Iranian oil for Russian goods. Dr. Willie declares, “We would have never gotten the Russian deal with Iran . . . to flood the world with oil that is not paid for in dollars. Also, to establish a pattern so that other countries can see you can go ahead and make deals to buy oil and don’t use the dollar. This is a boycott, and it’s a defiant step that is like saying follow our lead. It’s a model being created. Can you imagine Saudi Arabia importing oil? That’s like New York City importing arrogance. . . . This is a backfire against the Russian sanctions.” Dr. Willie goes on to say, “What we got is a Eurasian axis that is starting to form. It’s going to be Russia, China, India, and later, I think Germany is going to play a key role. Saudi Arabia and Iran are going to play a very strange role. They are going to end their conflict.”

    On when the rest of the world stops using the U.S. dollar after more than 40 years, Dr. Willie says, “I think we’ve gone 10 years longer than its ordinary lifetime should have been, and now we are on the death throws. . . . They are coming up with a gold backed ruble . . . If the U.S. wants to push them and poke sticks in the Russian bear’s face, they’re going to turn around and say ‘alright, we hear you. We’ll only accept rubles. We understand you want us to remain isolated and not use the dollar.’ The backfire is the Eastern Hemisphere has a critical mass, and this is something you just don’t hear in the Western press. It may be critical mass because it may be the majority of global trade. How do you isolate something that may be the majority of global trade?”

    How will this move away from the U.S. dollar effect America? Dr. Willie says, “The United States is going to find itself in a place where the U.S. Treasury bond is no longer of value. They are going to create a lot of paper, mythical, fictional, phantom demand, and that is going to cause the system to break.” Countries holding Treasury bonds are not waiting as Dr. Willie contends, “They have already started dumping. In the thirty days ending March 13, foreign nations dumped $100 billion in Treasury bonds. The United States tried to keep that quiet.” Dr. Willie goes on to say, “The new dollar, the Republic dollar, that will come about will have to be devalued 80%, which is going to result in a tremendous increase in imported prices.” Dr. Willie predicts that import price increase will eventually be a whopping “400%.” Willie says before it’s over, the USA will suffer. He predicts, “The local American citizens are going to wonder ‘how come the shelves are empty?’ This is third world, guys.”

    On gold and silver prices, Dr. Willie predict, “They are going to move it to $5,000 to $7,000 an ounce, and silver $200 to $400 per ounce. Because all the world’s central banks are going to need gold, they are going to sell Treasury bonds to buy gold to make for a solution to their banking systems. What’s the solution? It’s legitimate reserves, hard asset gold reserves.”

    In closing, Dr. Willie predicts, “I think you are going to see, by the end of this year, that the dollar is mortally wounded and Treasury bond regarded as toxic paper.”

    Join Greg Hunter as he goes One-on-One with Dr. Jim Willie, Editor of “The Hat Trick Letter,” which can be found on GoldenJackass.com.

    (There is much, much more in the video interview.)

  24. The trouble is the lousy stinking money system we have.

    Comments by Jason Hommel

    Here are some thoughts that came to me this week. I shared them on facebook a few days later. It was one of my most popular recent posts.


    Silver is money, rare, honest, true, heavy, measureable, weighable, countable, the best electrical conductor, a great heat conductor, the most reflective metal, good, pure, shiny, acoustical, antibacterial, valuable, the free markets choice for thousands of years, rewards production, savers, and thrift, maintains honest and limited government, restrains government, promotes freedom, is slandered, misunderstood, ignored, undervalued, overlooked, maligned, hated by bankers, usurpers, and usurers, is traded, hoarded, saved, appreciates, goes up in value, rewards miners, promotes the production of byproduct minerals needed by society, is beautiful, substantial, useful, is ever more useful and rare, increasing in rarity,

    Paper money is plentiful, dishonest, false, adulterated, watered down, dirty, filthy, moldy, dusty, diseased, imaginary, unjust, abominable, a theoretical abstraction, not identifiable, not definable, not measurable, inflatable, inflationary, intrinsically worthless, overvalued, used up paper, temporary, monopolistic, parasitic, easily counterfeited, a broken promise, a cause of taxes, oppresses the people, rewards laziness and political connections, corrupts politicians, subverts governments, heavily promoted by liars, is spent quickly, depreciates, grows more worthless, rewards debtors, rewards paper money printers, promotes tyrants and excessive and intrusive government, is a tool of theft, is evidence of theft, causes theft through imaginary and phantom capital gains taxes from inflation, causes theft from savers through devaluation, is worse than worthless, is harmful, causes economic distortions, encourages bad investments, encourages speculation, encourages debt, encourages leverage, discourages business, keeps alive bankrupt businesses, delays the natural business cycles, causes depressions, causes wars, funds wars, was discredited for hundreds of years in China, has currently lasted barely 101 years or 43 in America depending on how you count, has lost 99% of its value in 100 years in America,

  25. Deco

    Noonan’s comments on the housing market, are bad timing.

    Nasdaq dropping. Tech sector in trouble. Revenue is not sustaining the captal investment – instead it is being sustained by dubious “investment models based on social media companies and internet 2.0 stocks (“the cloud”). It has all the classic signs of an investment bublble. Tulip mania, SouthSea bubble, etc….The “projections” are not going to turn into cash flow.

    And for anybody living outside of the DART line area of Dublin and NE Wicklow the comments are slightly inappropriate.

    What happens to the Dublin real estate market when the capital inflows resulting from the tech bubble dissipate ? What happens when the state has to stop borrowing (like it is stiil doing) to sustain hundreds of fat quangos and the banking system ? what happens when the British economy has to control it’s borrowing, and suddenly, Ireland gets exposed again as being highly cost inefficient, like occurred when there was a mad shopping rush Newry ?

    Noonan’s timing is about to embarrass him greatly. He also has revealed that he really has no idea about what is sustaining the current market. Banks have NOT been fixed. Cost base has NOT been fixed. (if anything it is now even worse with all the stealth taxes).

    The East of Ireland has not dealt with it’s debt problem. Or even it’s cost base problem. In fact it is even getting worse. More delusional finance ponzi scheme thinking is being advocated as the solution to problems caused by the same thinking.

    The West of Ireland has not fixed it’s labour market problem (instead the problem has been exported). Capital shortfall, infrastructural problems, and systemic scale inefficieny are still widespread. There is both a lack of savings and a lack of investment. The lack of savings being a result of the fact that the wage-earning segment of the population have moved out. There is also an atmosphere of helplessness that is getting very serious indeed. And the demographic problem in Western counties is not getting serious.

    The South of Ireland has not yet fixed it’s political representation problem (sending the worst wasters to both the Dail and the EP). Diarmuid Flynn does offer the potential to fix this problem. Though it seems that in the south coast counties the mismangement of both debt and labour markets is not as extreme as further north.

  26. Economic Reality versus Illusion:

    * Economic Reality versus Illusion: No Recovery, Just Plunge, Stagnation and Renewed Plunge
    * Re-Intensifying Downturn Already Underway
    * Confluence of Negative Surprises, Including New Business and Systemic Woes, Should Hit U.S. Dollar and Spike Inflation
    * Hyperinflation to Intensify Unfolding Depression
    * Gold as a Store-of-Wealth and Safe-Haven Remains Primary Hedge for Maintaining Purchasing Power of Wealth and Assets

    -John Williams, Shadowstats.com, April 8, 2014

  27. Are we going to have a real shooting war with russia to divert the 100 million unemployed and the 50 million on food stamps.?

    Russia putting the finger to Uncle Sam ?


  28. uchrisn

    Nama should turn its properties into affordable housing and some social housing following the example of Singapore.
    There is global savings glut, with the aging population and pensions a part of that, also Sovereign wealth funds and oil backed funds. The printing of money in the US, Japan and the UK etc has added to the cash floating around. This money is looking for a return and its not getting it in bonds.
    Rental income Property, both residential and commercial is seen as a long term safe type investment.
    As the Irish economy picks up this money will find its way to Irish properties.
    We will have people slaving away to pay their business or home rent to the landords who have the capital and want a steady income. The people have no choice because shelter is a basic human need.
    The political will to stop this is non-existent due to the fact that the majority of voters are property owners, it’s not the politicians fault its the electorate.

  29. verybearish

    Good article and would agree with summation that the current bounce (dead-cat) is stemming from two things, cash rich “investors” with a lack of available alternatives whose average age profile is of an older bracket and therefore more risk averse, thus by default look to an area of investment that they “know” something about, first off an EU1.5mln family home in SoCo Dublin that is now say eu750-eu800k appears to be great value to many regardless of whether it should have been “worth” eu1.5mln ever the same way that im sure dutch tulips found buyers on the way down also. The appearance of value has driven some into the market without consideration for sustainability of these prices over the investment horizon which for real estate should be judged to be at least over 5-ten years. Also bond yields rightl or wrongly are not providing an all to desirable return currently (a traditional tool of investment for risk averse types) so taking a view that Ireland and Dublin will become a nation of renters is not the worst punt you could make.
    sadly the second major area of demand is coming from those that David has alluded to before and its the age bracket that are trapped into buying. Just because an economy may be stagnant or in decline does not mean that peoples lives can stay on hold, the desire to put roots down and provide a stable environment for your future or growing family is strong and there comes a point where waiting for a sunnier climate proves counter productive and mentally straining. It is these people I feel for, perhaps many of them were lucky or smart enough to not get caught out in the first bubble but i fear they will get burnt the second time around through no fault of their own other than traditional human desires (not greed).
    I disclose that I am seeing this through the eyes of a telescope as not currently living in Dublin (my skill set of employment doesnt really “fit” with current climate) but it would appear to me that average wages were not strong enough to sustain the first bubble in property let alone the cost of living and therefore credit was used to fill that gap, please correct me if im wrong but i dont feel (looking through help wanted ads ) that wages have done much in terms of heading south since 08 and the cost of living (mainly taxes)has. How can this situation lead to higher property prices in the future?

    Also we have aligned ourselves with the wrong team i feel, comments above pointed to how whoring ourselves out to the tech sector or social media types is probably not the best long term investment when you consider the rapid pace of change in this sector, jobs come and go in this space overnight. The pharma industry which is typically more stable showed how a change in their revenue stream can impact the country with pretty poor print in GDP of late being attributed to pfizers patent expiry on viagra, if pharma can cause such an impact how will the tech sectors volatility affect the country ? Any one who has ever cared to trade the nasdaq can tell you how that will work …..as a clue its not very stable and prone to shocks.

    Lastly a word on our political system, nothing will change while we still have members of the old brigade of politics in our system, Young Irish people with ideas & genuine passion perhaps garnered from working abroad or those who actually care about communities and their friends and families will hopefully start to emerge and a career in politics will become more about doing things than furthering your CV for a corporate position and benefits later on in life. I already know one or two younger members that i trust and just hope they get their chance to do good before its too late and get drawn into the “way we do things around here” syndrome.

  30. [...] PRICE is NOT "CHEAP". No Doubt you'll condemn this source, just like Bertie. No country for young buyers | David McWilliams The frenzy has started again. Six years after a property boom practically destroyed our [...]

  31. [...] of thousands of new twentysomethings hanging out in town, looking for place to live and party. No country for young buyers | David McWilliams I knew you were a saddo from your first post- now go get that life Sign in or [...]

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