June 18, 2015
We must go to Athens. Will you come if I can get the aunt to fork out 20 quid?
So said Buck Mulligan to Stephen Daedalus in the opening chapter of Ulysses.
I’ve just come back from the Martello Tower at Sandycove – all Joyced up – where this opening scene from ‘Ulysses’ takes place. My Twitter feed is alight with stories from Greece as I try to write, between listening to some wonderful renditions of Joyce and scoffing down a few kidneys for breakfast, courtesy of Peter Caviston in Glasthule.
Greece and its ancient Hellenic classic civilisation was never far from the classically educated Joyce and it informs so much of Joyce’s writing. Isn’t it a bit ironic that here, on Bloomsday, all I can hear is how Greece is being hung out to dry by politicians who, unlike Joyce, have no sense of history?
Will Europe’s bean-counting civil servants ever learn that money that can’t be paid back won’t be paid back?
The Greece conundrum looks like it is coming to a head. Most rational people believe that Greece and its creditors should just apply the rules of capitalism to the debts. The Greeks should explain to the creditors that they are co-responsible. Athens should pay them nothing and see what happens.
The story of Greece is a universal story and unfortunately it is the story of our age. It’s the story of the poor versus the rich, the debtor versus the creditor and, most crucially, it’s the story of the difference between the man who earns his income from wages and the man who earns his income from rents, interest or dividends. One has assets and gets progressively richer; the other wages and debts and struggles to stand still.
The same applies to countries.
The debtor country, like Greece, earns its income from work and pays this (because of all its debts) to the creditor, who then turns this Greek income into rents or interest.
As long as the EU sides constantly with the interests of creditors and tries to turn the eurozone into a ‘creditors’ paradise’, where there is no risk implied in lending money, there will be massive political problems, because siding with the creditor is always going to make the rich richer and the poor, poorer. We see a similar siding with the creditor and putting the interests of the creditor first at work in everyday Ireland. It is the property market. In Ireland, the odds are stacked in favour of the landlord against the tenant.
Rents are rising much faster than wages and house prices are rising faster than both.
This means that the landlord, who is (almost always) already rich, simply gets more and more rent and the tenant pays a greater and greater proportion of his wages out as rent. In the buying market, the first-time buyer is being priced out by the cash buyer who is hoping to turn the potential first-time buyer into a long-term tenant, out of whom the cash ‘investor’ can extract rent into perpetuity.
Obviously, the bigger the landlord or cash buyer, the better the terms he gets for the initial capital he needs to buy the property and the more he can squeeze in rent out of the tenant. So the big guy is winning twice. He is minimising his costs and maximising his income. This is what I would term ‘endemic landlordism’.
This process is insidious and creates a bias in a society, which leads to all sorts of anomalies in the housing market.
Joyce would have known all about endemic Irish landlordism.
Joyce’s father, John, began as a man of some means and ended up poor. The moves he and his family made around late 19th and early 20th century Dublin describe a tightening spiral from wealth towards poverty – from the leafy, red-brick suburbs of Rathgar and Rathmines, to the less posh Bray and Blackrock and down to the shabby, poor north inner city.
Having moved to 20 different addresses in Dublin before his early twenties, Joyce ended up in the Tower at Sandycove. When he left there hastily, captured in the first chapter of Ulysses, he hurtled out of the tower and not only never came back to Sandycove, but never lived in Ireland again.
I wonder how much this lack of a secure place to live for any decent period of time affected Joyce and his view of this country?
Not having a place to live, constantly looking over your shoulder or waiting for the rent to go up or not being able to get enough money together to get a place of your own, has a profound effect on people, their marriages and families. In Ireland today, young workers can’t afford to buy a place to live and this is a massive problem, which extends well beyond just economics.
Let’s look at the fundamental inequality about what is going on, whereby rich investors are getting a massive subsidy when they buy property and the average person, who simply wants to get a place to live, is paying a massive premium.
Let’s look at a massive property fund called the Ulysses fund. The irony of a secure landlord fund named after James Joyce, who was possibly one of the most insecure and peripatetic of all tenants, shouldn’t be lost on anyone.
This fund of properties is owned by big investors who probably borrowed in foreign currencies at very low rates of interest that are available only to the very rich. The portfolio cost €150m for properties that were valued at €2bn at the peak of the commercial property market in 2007.
Ulysses comprises 14 offices, 51 retail units and 31 apartments with 90 underlying occupational leases spanning a mix of long and short-dated terms. The current annual income is €13.94m – or close to 9pc. Many of the tenants are Government agencies, so you, the taxpayer, are the underwriter.
There is nothing illegal about any of this. It just shows you how, if you have access to capital, Irish property is a winner.
If, in contrast, you are a first-time buyer, you are probably paying 4.5pc plus for your money. You are paying over the odds because you are bidding against your friends and there is the cash buyer to contend with who can always outbid you.
When I see the young and not so young of Ireland pinned to their collars to try to find a place to live, while wealthy foreigners who bought portfolios for half-nothing make out like bandits, I’m reminded of Joyce’s observation about this country: “Ireland is the old sow that eats her farrow”.
Was he right?