Lessons to be learned from the housing bubble

AARRRGH

Hello

I thought this might be an interesting thread.

Here are four general lessons I've learned from the housing bubble -

1. If some person or some organisation has a vested interest in some topic, they will say or do whatever is necessary to push their own agenda. It doesn't matter if they are well educated, 'professional' and respected, there is a good chance they will lie to maintain their power or source of income. Apply this scepticism to anything any expert says (even things like medicine.) Never trust statistics if they are from an organisation who has a vested interest in the subject matter.
2. Denial is a very powerful thing, and is a big problem in our society.
3. People believe what they read in the paper, even if it is clearly wrong. Trying to educate these people into seeing the light is difficult and takes time.
4. You can make a lot of money in a bubble. Try to recognise a bubble and get in at the start.

What have you learnt?

ntlbell

People have never used a ladder to get down off a roof.

SoupyNorman

A rapid expansion is always followed by a rapid contraction.

EKRIUQ

People are going to talk up a ressesion even more than a boom

partyguinness

The banks are not as smart as we thought...

D3PO

AARRRGH wrote: »

Hello

I thought this might be an interesting thread.




If some person or some organisation has a vested interest in some topic, they will say or do whatever is necessary to push their own agenda. It doesn't matter if they are well educated, 'professional' and respected, there is a good chance they will lie to maintain their power or source of income. Apply this scepticism to anything any expert says (even things like medicine.) Never trust statistics if they are from an organisation who has a vested interest in the subject matter.

People believe what they read in the paper, even if it is clearly wrong. Trying to educate these people into seeing the light is difficult and takes time.

Doesnt take the recent bubble collapse to understand vested interests will always puch their agenda.

its always been the case that the majority of people in this society cant think for themselves. its actually sad to think about it !

AARRRGH

D3PO wrote: »

Doesnt take the recent bubble collapse to understand vested interests will always puch their agenda.

its always been the case that the majority of people in this society cant think for themselves. its actually sad to think about it !

It is sad!

Two random topics I am interested in at the moment are the health industry (e.g. drugs companies) and the politics of prostitution.

It's unbelievable how corrupt science is - pushing expensive poisonous drugs on people who don't need them - and how extremist prostitution organisations are - for example, did you know the human trafficking figures are actually "foreign women working as prostitutes" rather than "foreign women tricked and forced to work as prostitutes". Quite a difference yet they want you to believe they are the same thing...

I would imagine this sort of corruption applies to all parts of society. It makes you realise you can't really believe anything anymore. A bit depressing really...

D3PO

talking about science (we are getting wayyyyy off topic here) its also a disgrace that the HSE wont substitue to generic medicines from the brands they use.

I mean are we not pissing away enough money as a country without the HSE making even more of a balls up with their finances

AARRRGH

D3PO wrote: »

talking about science (we are getting wayyyyy off topic here) its also a disgrace that the HSE wont substitue to generic medicines from the brands they use.

I mean are we not pissing away enough money as a country without the HSE making even more of a balls up with their finances

They'll claim the branded ones are "better" but in fact it's probably a combination of incompetence and corruption. I've noticed those two normally go hand in hand...

whizzbang

I learned that the phrase "1,000,000 people can't be wrong" is total BS. If ever anyone uses that excuse to do something run a mile.

Also learnt that spending less than you earn never goes out of style.

partyguinness

I guess it was the safety in numbers mentality...

AARRRGH

whizzbang wrote: »

I learned that the phrase "1,000,000 people can't be wrong" is total BS. If ever anyone uses that excuse to do something run a mile.

I've learnt if everyone else is doing it, it has to be wrong...

Madame Razz

D3PO wrote: »

talking about science (we are getting wayyyyy off topic here) its also a disgrace that the HSE wont substitue to generic medicines from the brands they use.

They have already a agreed a number of systematic price reductions on older medicines as opposed to introducing generic substitution for drugs which are now off patent. 2 have occured since March 2008.

AARRRGH wrote: »

They'll claim the branded ones are "better" but in fact it's probably a combination of incompetence and corruption. I've noticed those two normally go hand in hand...

Cheaper is not always better. Generic medicines legally only have to be 84% the same as the original compound/molecule they are replicating. Their potency versus the original compound can be anywhere between 40% and 140% as potent as the branded product.

That has consequences for patients. Many medics in the Uk would love the opportunity to have more freedom in how they prescribe in practise, but they do not have that due to enforcement of generic prescribing and many feel that that has consequences for their patients and does not offer them the best treatment available.

Drug prescribing should be about what is best for the patient as opposed to what is cheapest on the formulary. You are dealing with peoples lives, you cannot correlate that to cost. This still remains the main opinion amongst Doctors and Consultants in this country by and large.

Granted, Big pharma is corrupt to the extent that it manufactures 'lifestyle drugs' which are not essential to daily living/good health, but if the market exists for them, they will seize it. They do however manufacture drugs which actually save lives and/or keep people alive.

Added to which the pharmaceutical industry employs thousands upon thousands of people in this country, as well as the offshoot business/trade it generates.

Do you really think if the HSE introduced generic prescribing in the morning they(the pharma companies) would not up and leave and go somewhere where production is cheaper and the workforce are as educated and can be paid less?? To an extent, the Irish market as it stands keeps them here. I'm not saying the country has an allegiance to any of these companies, but, in the current state of affairs, happen it has to a degree.

Eitherway, I don't think thats the sort of Russian Roulette the government wants to play anytime soon; things are bad enough; and the live register is big enough as it is.

And generic medicines aren't even the same; never mind better.

(Apologies for being off-topic btw)

MR

dudara

The general populace have no concept of value.

Gurgle

When you've seen the bandwagon going by, its already too late

MG

The power of fear and greed.

Your house is an investment.

Timing is everything.

TaxiManMartin

For every blind bull in a boom the is an equal and opposite blind bear in a bust.

dny123456

If you keep predicting a bubble and its imminent bursting, you will eventually be right. Or in other words...

In the long term, everyone is right.

johnnyskeleton

AARRRGH wrote: »

Hello

I thought this might be an interesting thread.

Here are four general lessons I've learned from the housing bubble -

1. If some person or some organisation has a vested interest in some topic, they will say or do whatever is necessary to push their own agenda. It doesn't matter if they are well educated, 'professional' and respected, there is a good chance they will lie to maintain their power or source of income. Apply this scepticism to anything any expert says (even things like medicine.) Never trust statistics if they are from an organisation who has a vested interest in the subject matter.

It is right to be sceptical to a certain degree, but use your scepticism to ask questions rather than simply disbelieve. For example, if you substitute internet medical information for a doctor's expert opinion, you can only blame yourself. If a lawyer tells you that a certain course of action is risky and you ignore him, be prepared to accept the consequences of your actions.

Denial is a very powerful thing, and is a big problem in our society.

And it can be very costly for the individual.

People believe what they read in the paper, even if it is clearly wrong. Trying to educate these people into seeing the light is difficult and takes time.

That's more an argument for better newspapers rather than suggesting that people get their information some other way.

You can make a lot of money in a bubble. Try to recognise a bubble and get in at the start.

You can make a lot of money in all sorts of risky bubbles. You can equally lose your shirt. Either way, it isn't a whole lot different to betting on horses.

What have you learnt?

I like to think that I'm still learning.

EKRIUQ wrote: »

People are going to talk up a ressesion even more than a boom

With very important differences:

1) during the bubble the people who talked it up based it entirely on "property prices always go up" or based on past performance, whereas the dissenting voices tried to base their analysis on more rational criteria.

2) during the bust, the "doom mongers" as they are called are looking at how the economy will revert to a more sustainable level, while the dissenting voices are limited to either branding the others as doom mongers or else pointing to any weak evidence of "green shoots".

With all this talking up talking down nonsense, why don't people recognise that the goal is to give an accurate analysis rather than to pick a side and talk it up/down.

tedstriker

SoupyNorman wrote: »

A rapid expansion is always followed by a rapid contraction.

Not strictly true, look at what happened in Japan. Their contraction lasted over a 15 years and is still going. This could happen in ireland as we are in the eurozone and cannot inflate our way out of this and also there seems to be people who think that house prices as they stand now are as low as they'll get. The BEST thing to happen would be a speedy contraction.

RATM

I've learnt that when you hear that your local taxi man and postman have bought two apartments each in eastern Europe then you know its time to sell.

MG

dny123456 wrote: »

If you keep predicting a bubble and its imminent bursting, you will eventually be right. Or in other words...

In the long term, everyone is right.

You're right or will be.

whizzbang

dudara wrote: »

The general populace have no concept of value.

I've been thinking about this a bit lately and I think it is also fair to say that we have lost the ability to judge quality. People just look at the price and if it is expensive then it is good. If one brand is more expensive than another brand then it is "better". I think this is why people think Lidl and Aldi stuff is of inferior quality. Even though in blind tests they quite often come out in the top 25%.

I guess it is easier to just buy the expensive stuff and assume it is better than to judge things for yourself.

Caoimhín

I think the Irish media have a lot to answer for. Some of our once trusted publications were infested with vested interests and turned into nothing more than propaganda publications.
This extended to the state broadcaster and the so called "paper of record" the Irish Times (indeed the Times' property supplement was amongst the worst offenders). I am still bemused how the likes of Tom Parlon of the Construction Industry Federation is still allowed such unfettered access to the broadcasters.

godtabh

How can you stop market forces?

If legislation is brought would it not be anti competitive (ask Intel about that)? Its up to the people who they treat the next housing “boom”.

To me the most important thing that can be done is proper planning and regulation of how the bank gives loans (which would help control market forces).

Fighting Irish

I've learnt that the majority of people are stupid, but its ok cos its the banks and the governments fault

Fighting Irish

I just hope people will learn from this

southofdub

I reckon it will be a long time before we hear " You can't lose in bricks and mortar" being bandied about again.:D
"Soft Landing" my a**e:)

Senna

People get brainwashed during booms and during the bust will not believe where the bust will end. Even though all boom bust cycles follow a very similar pattern, with it ending at prices returning to the pre-boom (1998 in Irish housing prices) levels.

Broad

Am looking forward to the doorsteppers before the local and Euro elections - asking "did you know the collapse was coming and did you lie, or did you not know it was coming cos you were stupid?" And thats to ALL of them. Not just the government parties. Those are the only two options. Either thick or liars. Cos we all saw it coming. Why should it have been any different this time? Boom always precedes bust. Long term though property will most likely hold well even if in negative equity now, as long as property with decent location and good build.

Duckjob

Advice from your elder generations should be listened to, but not necessarily followed...

Jaysoose

Some things i have learned since the bubble ended:

1. Hindsight is 20/20
2. Everybody is a property expert
3. Everybody is an economics expert
4. The amount of smug topics being created with a 'Told you so' Undertone on boards is sickening.

gurramok

On point 4.

All it takes is a search of a posters older posts pre-bubble bursting to distinguish from the ones who were right and the ones who are on the bandwagon.

AARRRGH

whizzbang wrote: »

I've been thinking about this a bit lately and I think it is also fair to say that we have lost the ability to judge quality. People just look at the price and if it is expensive then it is good. If one brand is more expensive than another brand then it is "better". I think this is why people think Lidl and Aldi stuff is of inferior quality. Even though in blind tests they quite often come out in the top 25%.

I guess it is easier to just buy the expensive stuff and assume it is better than to judge things for yourself.

There was an example of this on boards recently. I can't remember the exact details but it went something like this -

Someone was in Tesco and noticed the Tesco Premium Quality Cola was €7.50 per two litre bottle. They asked a staff member is this correct and they said it was.

A few people reading the thread said they must try it as it must be good...

AARRRGH

Caoimhín wrote: »

I think the Irish media have a lot to answer for. Some of our once trusted publications were infested with vested interests and turned into nothing more than propaganda publications.
This extended to the state broadcaster and the so called "paper of record" the Irish Times (indeed the Times' property supplement was amongst the worst offenders). I am still bemused how the likes of Tom Parlon of the Construction Industry Federation is still allowed such unfettered access to the broadcasters.

I know, it's quite amazing.

It really reinforces the concept that the news is just a branch of the entertainment industry...