Japan's housing slump was scary, and ours could be too

Firetrap

How about if we didn't have a property bubble?

• Wages wouldn't have been so high because people wouldn't have needed to earn so much in order to have a roof over their head - this has affected Ireland's competitiveness. It doesn't matter if you earn a lower wage if you've got a lower mortgage.
• People wouldn't have had to buy houses/apartments miles and miles from where they work, then forced to cause massive congestion on the roads morning and evening.
• Vast swathes of the countryside wouldn't be filled with estates of unsellable houses/apartments that were only built because of the bubble. I honestly don't think there's much demand for apartments in rural Leitrim.
• The property bubble managed to "hide" the fact that a lot of people were losing their jobs in other industries. It was OK because they were able to get jobs in construction. Now that those jobs are gone....where will they get another job? A job that will pay enough to cover the massive mortgage they've to pay back.
• Because of the massive over-pricing of houses, a lot of people who should have been able to buy houses in their own right ended up having to resort to affordable housing (funded by taxpayers money dontcha forget!).
• The economy became overdependent on construction money. Now that the bubble has burst, the money has stopped. If everything was OK and there hadn't been a bubble, we wouldn't have an economic downturn.
• There's a lot of talk about the stability of Irish banks at the moment. Why? Construction.
• Ireland didn't need to have an insane property boom in order for the economy to prosper. It was a false wealth.

ZYX

bugler wrote: »

Carrying the can means having no choice. The taxpayer who saw the insanity, the imbalance, the irrationality, can't opt out of paying for it. Hence why they're justifiably angry.

What is taxpayer paying for?

• Loss of revenue that was only there in the first palce due to boom.
• Extra loss of jobs from construction industry and other boom related jobs.

Basically tax payer is simply back to where it was pre boom.

ZYX

Firetrap wrote: »

• Wages wouldn't have been so high because people wouldn't have needed to earn so much in order to have a roof over their head - this has affected Ireland's competitiveness. It doesn't matter if you earn a lower wage if you've got a lower mortgage.

But people who didn't buy a house (ie the majority)still got higher wages

• Firetrap wrote: »

  People wouldn't have had to buy houses/apartments miles and miles from where they work, then forced to cause massive congestion on the roads morning and evening.

People didn't have to buy at all

• Firetrap wrote: »

  Vast swathes of the countryside wouldn't be filled with estates of unsellable houses/apartments that were only built because of the bubble. I honestly don't think there's much demand for apartments in rural Leitrim.

Well 40,000 units. Hardly vast swathes of countryside.

• Firetrap wrote: »

  The property bubble managed to "hide" the fact that a lot of people were losing their jobs in other industries. It was OK because they were able to get jobs in construction. Now that those jobs are gone....where will they get another job? A job that will pay enough to cover the massive mortgage they've to pay back.

So. They would have lost their jobs anyway. Atb least boom gave them a new job to go to, if only short term.

• Firetrap wrote: »

  Because of the massive over-pricing of houses, a lot of people who should have been able to buy houses in their own right ended up having to resort to affordable housing (funded by taxpayers money dontcha forget!).

Because politicians wanted votes.

• Firetrap wrote: »

  The economy became overdependent on construction money. Now that the bubble has burst, the money has stopped. If everything was OK and there hadn't been a bubble, we wouldn't have an economic downturn.

Because we wouldn't have had an upturn in the first place.

• Firetrap wrote: »

  There's a lot of talk about the stability of Irish banks at the moment. Why? Construction.

So banks values have dropped to 2000 levels or thereabouts. Ie pre boom levels

• Firetrap wrote: »

  Ireland didn't need to have an insane property boom in order for the economy to prosper. It was a false wealth.

Perhaps but it did help us become one of the worlds richest countries

Calina

ZYX wrote: »

Perhaps but it did help us become one of the worlds richest countries

I would just, on this subject, like to point out that we also have the heaviest burden of private debt in Europe or possibly second only to the UK. I wouldn't think that our network is anything like "one of the richest countries" and much of our wealth is tied up in property which is currently sliding/falling/plummeting in value.

SimpleSam06

ZYX wrote: »

we would not have had an industrial boom.

We didn't have an industrial boom. We should have, but we didn't.

ZYX wrote: »

What is taxpayer paying for?

• Extra loss of jobs from construction industry and other boom related jobs.

Basically tax payer is simply back to where it was pre boom.

The taxpayer isn't paying for the loss of construction related jobs, the taxpayer is in a considerably worse situation than before the boom due to massive spending on the public sector by the government, in terms of new hires and wage increases at three times the pace of the private sector. These people can't be fired, so we need to keep paying them.

The gigantic smoking crater of the US financial system is going to suck most of our economy in anyway. Its all well and truly fcuked.

jmayo

10goto20 wrote: »

Its not as clear cut due to the dub prime fiasco. House prices needed a correction as you quite clearly point out. We didn't need an economic crash.

The US housing bubble burst, sub prime fiasco eventually has taken major casualuties and it has in turn spread around the world and the government seems to be blaming all our troubles on this.
But our economy has been a false one over last 7 years, industrial jobs, manufacturing jobs and technology jobs have been disappearing. They were replaced by construciton jobs which was based on cheap credit.
House prices were overpriced and not sustainable, credit crunch or not.
We had lost competiveness due to rising costs.
Our economy was doomed anyway. It has been our bad luck that the US economy, indeed world economy has nose dived and that oil prices have rocked through the roof at the same time.

ZYX wrote: »

Your points are of course correct but, if we did not have a construction boom we would not have had an industrial boom. We would have had no boom. The mismanagement of the economy is really how the money generated by the boom was spent.

What industrial boom ?
We had a residential housing boom, and a retail boom.
Our industrial boomended in 2001 when the dotcom bubble burst and the telecoms companies took a hammering.
Elswewhere we lost manufacturing jobs, we lost foreign and domestic companies.
And don't believe the sh*** about 400 new jobs in Dundrum centre.
Where will the people get the money to spend in all these new shops.
Take a look at the number of sales down there over last few months, take a look at the number of shops doing shag all business.
This is one thing that I agreed with Ben Dunne on, FFS we went from 4,000,000 odd sq feet of retail space to 16,000,000 in under 5 years.

Really the only ones that made money during the "boom", and this is the housing one and NOT the real Celtic Tiger were those selling property e.g developers, land owners, builders, estate agents, lawyers and older people off loading houses to move elsewhere.
Some of these people got stung by re-investing in the system even more and now that the ar** has fallen out of things they are caught.

As for the rest of the people:
was there every any money bar the money borrowed either through mortaages, remortgages, cheap loans and credit cards ?
Lots of people were borrowing to buy over priced houses, foreign pads in Sunny Beach that no one now wants, investment properties in Leitrim that can't be rented, new BMWs, multiple trips abroad, shopping trips to New York, helicopter rides for first communions. weeks gambling in Cheltham, etc.

ZYX wrote: »

What is taxpayer paying for?

• Loss of revenue that was only there in the first palce due to boom.
• Extra loss of jobs from construction industry and other boom related jobs.

Basically tax payer is simply back to where it was pre boom.

Yeah except that bertie the great decided to increase the numbers working in public sector since 1997.
AFAIK numbers in health went up by over 60 % with no appreciable increase in services. Benchmarking was just a fancy way of giving more to unions with nothing in return.
Look at the money needlessly wasted in failed, overpriced and behind schedule projects : Luas, port tunnels, road infrastructure, e-voting, national stadium, toll bridge, PPARS. Our increased taxes were wasted by that incompetent gob**** from Drumcondra and his lackies including his lordship from Offally.
Take out construction and retail and I would bet we have lost jobs since 2001 which has been hidden up till now.

ZYX

to JMayo and SimpleSam06. I didn't say we had an industrial boom. I know we didn't.
On the other point about how the boom was spent. I have no problem with your points. Politicians of all parties have shown great incompetence in managing the income from the boom. I had already made that point and I agree with you. However as well as paying for poor civil service the boom money also paid for a 1000% increase in child allowance, massive increases in pensions, kept fuel price increases low (compare UK to Ireland), increased spending hugely on Health and other services.

The_Conductor

Just to clarify a point- the numbers employed in the civil service have actually fallen by over 14% since 1997. Its the public sector- and in particular the HSE, State Bodies and various quangoes, where vast numbers of new public sector posts were created- not the civil service (as lots of people are discovering over on the work forum here on boards )

jmayo

smccarrick wrote: »

Just to clarify a point- the numbers employed in the civil service have actually fallen by over 14% since 1997. Its the public sector- and in particular the HSE, State Bodies and various quangoes, where vast numbers of new public sector posts were created- not the civil service (as lots of people are discovering over on the work forum here on boards )

Exactly the jobs have been in mickey mouse organisations set up for this that and the other. Would the highly efficient NRA not be one of these?
Am I right do you work in Dept of Ag ?

SimpleSam06

ZYX wrote: »

However as well as paying for poor civil service the boom money also paid for a 100% increase in child allowance, massive increases in pensions, kept fuel price increases low (compare UK to Ireland), increased spending hugely on Health and other services.

No, thats not good enough. The amount of damage that was done and is being done ongoing vastly outweighs the good that was done, in particular your last point, where health spending increased with no appreciable increase in services. The boom did pump in a lot of cash into government coffers, although you could call that a transfer of debt from public to private hands (just as dangerous for the wider economy, maybe even more so), and even with that, the wealth was squandered, plain and simple, and wasted in a way guaranteed to cripple the country for decades to come.

smccarrick wrote: »

Just to clarify a point- the numbers employed in the civil service have actually fallen by over 14% since 1997. Its the public sector- and in particular the HSE, State Bodies and various quangoes, where vast numbers of new public sector posts were created- not the civil service (as lots of people are discovering over on the work forum here on boards )

I think a lot of people use the terms civil service and public sector interchangeably, in the erroneous assumption that they are the same thing in Ireland, which strictly speaking they aren't (although the civil service could be seen as a subset of the public sector).

gurramok

I think what ZYX is missing is that the coffers that were overflowing paying for all those good things was not sustainable and was based on short term gain for only a few years.

Private debt is the key, if people are in debt and cannot afford to buy things, you cannot expect them to keep VAT receipts high! (our consumer spending is supposed to be over 60% of the economy)

Thats where we are now and what i had said about relying on stamp duty revenue to pay for things plus we had a SSIA splurge for a year and thats gone also!

20goto10

I think people under estimate the Irish economy. There's plenty of people with bucket loads of cash. They're just not spending it. Banks are offering great interest rates and on top of that it very much back to saving for a rainy day and putting off the sun room extension until the USA recovers and the positive ripples reach Irish shores again. Not everyone bought a house in the drop zone and not everyone got landed with a load of debt. Oh gosh, a bit of positivity....how bullish of me :rolleyes: But on a more negative note, everyone with a pension has been stung on the rectum....but wait for it I've more positivity....most of the population are young enough for it not to make any significant difference in the long run. I think I'll go check my bank balance now there should be more interest piling on since I last looked...

jmayo

20goto10 wrote: »

I think people under estimate the Irish economy. There's plenty of people with bucket loads of cash. They're just not spending it. Banks are offering great interest rates and on top of that it very much back to saving for a rainy day and putting off the sun room extension until the USA recovers and the positive ripples reach Irish shores again. Not everyone bought a house in the drop zone and not everyone got landed with a load of debt. Oh gosh, a bit of positivity....how bullish of me :rolleyes: But on a more negative note, everyone with a pension has been stung on the rectum....but wait for it I've more positivity....most of the population are young enough for it not to make any significant difference in the long run. I think I'll go check my bank balance now there should be more interest piling on since I last looked...

Not everyone got landed with huge debts but enough people did and that has huge long term consequences for our country. Some of it will last for the duration of people's working lives.

To highlight your pension point, I got my PRSA statement last week, upto that point it had dropped nearly 19% over last year. That is not even taking into account the last week or so of upheaval in the markets.
I joked to someone, that at this rate I will be paying money to the insurance
company when I retire and not the other way around.

Yeah we are getting ok rates on some deposit accounts but I get the feelings some of the banks offering them are either on shaky ground needing more deposits to balance the huge debts they are carrying or they have had a troubled history (e.g Northern Rock) and are really trying to regain market share that they lost.

stevedublin

jmayo wrote: »

Look at the money needlessly wasted in failed, overpriced and behind schedule projects : Luas, port tunnels, road infrastructure, e-voting, national stadium, toll bridge, PPARS.

I agree with most of your post, but this bit riles me. The luas, port tunnel and upgraded roads will be seen as some of the few good things we got from this boom so please dont throw them in with the same group as e-voting, toll bridge and PPARS.
Classic case of throwing the baby out with the bathwater.

AARRRGH

Firetrap wrote: »

Because of the massive over-pricing of houses, a lot of people who should have been able to buy houses in their own right ended up having to resort to affordable housing (funded by taxpayers money dontcha forget!).

I agree with the rest of your post, but I want to pick you up on this point -

Affordable housing is for people who can already afford a home but don't want to live in Tallaght or Blanchardstown. It is for people who want a 500k home for the price of a 300k home.

It's a total scam.

jmayo

stevedublin wrote: »

I agree with most of your post, but this bit riles me. The luas, port tunnel and upgraded roads will be seen as some of the few good things we got from this boom so please dont throw them in with the same group as e-voting, toll bridge and PPARS.
Classic case of throwing the baby out with the bathwater.

Hang on there, just becuase something is realtively beneficial does not override the fact that it comes in way over budget and behind time. How long did it take the Luas to be built ?

In 5 years in Hong Kong, they built 10km of motorway on stilts above another motorway (only building at night), they levelled and joined two islands to built a single island with major airport, they built longest double decked suspenion bridge even though they have violent storms preventing work at certain periods of the year and they they created 15km odd of motorway and train line on land that had to be created alongisde a mountainside.
And before you say communism, this was done in the 5 years pre communist talkover.
What we achived in 10 odd years they would achieve in 1 at quarter of the cost.

Would you be willing to wait two weeks to get a car tyre puncture repaired and be charged €2,000 for the priveledge, just so that you can drive your car around again?
No you bloody wouldn't and that is affectively what happened in both these projects.

Also they are both cockups in their own way.
We have two Luas lines that are not connected to each other and barely to any other transpoirt infrastructure (maybe Connolly counts here).
Also the port tunnel cannot handle supersize trucks meaning they can't be used out of Dublin port, it has been labelled a fire hazard by Dublin Fire Cheifs, it has been flooded and closed numerous times for other reasons.

And don't get me started on our road upgrades, some of them are badly designed, poorly built and we are going to be paying for them over next 30 years even though motorists taxes account for approx. 6 billion to exchequer.

stevedublin

jmayo wrote: »

Hang on there, just becuase something is realtively beneficial does not override the fact that it comes in way over budget and behind time. How long did it take the Luas to be built ?

In 5 years in Hong Kong, they built 10km of motorway on stilts above another motorway (only building at night), they levelled and joined two islands to built a single island with major airport, they built longest double decked suspenion bridge even though they have violent storms preventing work at certain periods of the year and they they created 15km odd of motorway and train line on land that had to be created alongisde a mountainside.
And before you say communism, this was done in the 5 years pre communist talkover.
What we achived in 10 odd years they would achieve in 1 at quarter of the cost.

Would you be willing to wait two weeks to get a car tyre puncture repaired and be charged €2,000 for the priveledge, just so that you can drive your car around again?
No you bloody wouldn't and that is affectively what happened in both these projects.

Also they are both cockups in their own way.
We have two Luas lines that are not connected to each other and barely to any other transpoirt infrastructure (maybe Connolly counts here).
Also the port tunnel cannot handle supersize trucks meaning they can't be used out of Dublin port, it has been labelled a fire hazard by Dublin Fire Cheifs, it has been flooded and closed numerous times for other reasons.

And don't get me started on our road upgrades, some of them are badly designed, poorly built and we are going to be paying for them over next 30 years even though motorists taxes account for approx. 6 billion to exchequer.

so what should the Irish government do? not spend anything on transport infrastructure? I think its important to invest in the future, my 2c

jmayo

stevedublin wrote: »

so what should the Irish government do? not spend anything on transport infrastructure? I think its important to invest in the future, my 2c

SteveDublin you are missing my whole point.
It is important to invest in the future but there is a little thing called value for money, which the last couple of governments and their agencies forgot all about. Sure there was loads of money and so what if the contractor charged a few more quid, sure isn't all good for all of us.

When you go out to buy something or get some work done, like a new kitchen do you disregard how long it will take and how much it will cost in the end, just because you know it will be a better kitchen than the one you have.
If so then I want to do work for you.

Yes we are talking about big projects here, but we are also talking about no control over cost and time overruns. There was no value for money.
Even then the projects are planned half ar**ed, and either built with no foresight or disregard for future trends.
If you can't see that then you must never have set foot outside good ould Ireland or maybe you are a grassroot member of the builders party.

Believe or not we are leaders in one field, we are the best example to other countries on how not to do infrastructure projects.

who_ru

jmayo wrote: »

. Our increased taxes were wasted by that incompetent gob**** from Drumcondra and his lackies including his lordship from Offally.
Take out construction and retail and I would bet we have lost jobs since 2001 which has been hidden up till now.

I agree 100%, Ahern was utterly incompetent, he was never a leader and had absolutely no vision in terms of how society should progress, in short he was pointless. Cowan is merely a continuation.