Does anyone really know where we are heading?

mirwillbeback

Hi all,

Not a regular contributor to this particular forum, normally choosing to distract myself from the position we are in by focussing on sport.

But I have to ask as I am really getting pretty anxious, worried and downright scared. Is there a way out of this economic mess.

I work in a bank ( pretty low level ) and can tell you the volume of work is absolutely frightening. Were I to lose my job I would have no idea what else to do. I've no trade and all I have is bullsh!t experience of how to look important in a crappy industry. I was at a meeting the other day where it was discussed what would happen were the Irish to withdraw from the euro and " how the bank could protect employees were there to be rioting on thr streets " :eek:

I've two young boys, a gf and a house. Luckily we are relatively ok but I fear so much for my, and especially the boy's future.

So I want to ask you guys in the know - is there a way out of this. Is there a realistic chance of bankruptcy and what will that mean for families. Will the country stop to function, will all industry cease?

Might be getting in a panic for nothing, but would like to see what you fellas think.

Cheers

Tora Bora

mirwillbeback wrote: »

Hi all,

Not a regular contributor to this particular forum, normally choosing to distract myself from the position we are in by focussing on sport.

But I have to ask as I am really getting pretty anxious, worried and downright scared. Is there a way out of this economic mess.

I work in a bank ( pretty low level ) and can tell you the volume of work is absolutely frightening. Were I to lose my job I would have no idea what else to do. I've no trade and all I have is bullsh!t experience of how to look important in a crappy industry. I was at a meeting the other day where it was discussed what would happen were the Irish to withdraw from the euro and " how the bank could protect employees were there to be rioting on thr streets " :eek:

I've two young boys, a gf and a house. Luckily we are relatively ok but I fear so much for my, and especially the boy's future.

So I want to ask you guys in the know - is there a way out of this. Is there a realistic chance of bankruptcy and what will that mean for families. Will the country stop to function, will all industry cease?

Might be getting in a panic for nothing, but would like to see what you fellas think.

Cheers

Tell us more! Which bank? Is there a branch wide training program going on, to teach employees how to act / react in the event of Ireland leaving the Euro.

Perhaps it is you who is in the know, not the wafflers who regularly try to look wise on here!

Tell us all, from the inside perspective, and the inside peerspective on the likely outcome over the next year or so!

You say your are low level within the bank, but you get to hear what the mid to higher echelons are saying in the canteen.

Speak man, speak!

pog it

Hey there mirwillbeback, fair play to you for thinking ahead. The best thing you can do is gain more qualifications in the financial field and you will ride out any tough times that might happen to you. My brother is a qualified accountant, works full-time in a hedge fund company, and is now doing the CFA exams on top of already having done the ACCA exams. He doesn't have kids but he also teaches music to a lot of students during the week (not sure how many hours he spends at this actually ) but he still manages to find the time to do these exams.

The great thing about the CFAs or ACCAs is that you pay per exam and for course material and it's not nearly as expensive as doing a masters. I'm sure you know these are highly regarded qualifications in the financial sector.

So what I'm saying is keep your head down and work as hard as you can to safeguard yourself. With the government's current strategy and warnings from several economists and analysts about the dangers we face, all anyone can do is safeguard themselves as best as they can.

Tipp Man

mirwillbeback wrote: »

Hi all,


So I want to ask you guys in the know

Your biggest mistake in the post - nobody on here knows what's going to happen because nobody in the world knows whats going to happen

People can give their opinion - some of it expert, some of it not - but that's all it is an opinion.

I think you can relax mirwillbeback. Your meeting was just a contingency. I watched a doc last night saying that the US military has plans to fight off an alien invasion, and has run simulated war games on the subject - doesn't mean it's likely to happen, but in the same sense your employer is just covering its ass should there be a withdrawal from the Euro.


Ireland as a country is fine. We'll chugg along on the present course for a few years and we'll begin a very slow recovery and pay off our massive debt bit by bit while the country becomes accustomed to having less stuff.

Apocalyptic scenarios make great reading, but they're very unlikely to happen seeing as everyone has so much to lose.

BeeDI

Rojomcdojo wrote: »

I think you can relax mirwillbeback. Your meeting was just a contingency. I watched a doc last night saying that the US military has plans to fight off an alien invasion, and has run simulated war games on the subject - doesn't mean it's likely to happen, but in the same sense your employer is just covering its ass should there be a withdrawal from the Euro.


Ireland as a country is fine. We'll chugg along on the present course for a few years and we'll begin a very slow recovery and pay off our massive debt bit by bit while the country becomes accustomed to having less stuff.

Apocalyptic scenarios make great reading, but they're very unlikely to happen seeing as everyone has so much to lose.

Don't be so sure. Wise option is to build a secure underground bunker, with two main aims in mind.
1. Place to stuff your euros, swiss franks and US dollars, in case the Euro goes down the tube.

2. Hidey hole for when the Euro goes down the tube, and the streets are no longer safe.

Just remember, to stock the bunker, with several months worth of tinned and dried food as well as your currency:cool:

careca11

mirwillbeback wrote: »

Hi all,

Not a regular contributor to this particular forum, normally choosing to distract myself from the position we are in by focussing on sport.

But I have to ask as I am really getting pretty anxious, worried and downright scared. Is there a way out of this economic mess.

I work in a bank ( pretty low level ) and can tell you the volume of work is absolutely frightening. Were I to lose my job I would have no idea what else to do. I've no trade and all I have is bullsh!t experience of how to look important in a crappy industry. I was at a meeting the other day where it was discussed what would happen were the Irish to withdraw from the euro and " how the bank could protect employees were there to be rioting on thr streets " :eek:

I've two young boys, a gf and a house. Luckily we are relatively ok but I fear so much for my, and especially the boy's future.

So I want to ask you guys in the know - is there a way out of this. Is there a realistic chance of bankruptcy and what will that mean for families. Will the country stop to function, will all industry cease?

Might be getting in a panic for nothing, but would like to see what you fellas think.

Cheers

personally I think Bankruptcy is very , very realistic , the mean reason for this is the Gov don't have the balls the tackle the area's where real savings to budget deficit are needed ,
take croke park deal ....................and absolute cop out
the pension levy ...the rich are exempt because of some legal term (Hello CHANGE THE FCUKIN LAW) ,
THE RICH ARE STILL GETTING RICHER ......................at the expense of the poorer

careca11

more job losses , hot off the press
http://www.boards.ie/vbulletin/showthread.php?t=2056281344

Nijmegen

The country going bankrupt will happen, it's the assumed logic of any financial press outside of Ireland. We're as deluded about our soft landing as we are about it.

However - and this is my main point - the sun will rise in the morning afterwards.

later12

It is not possible to say where we are going for certain, but there are two outstanding alternatives

Either we are on the slow path to greater European integration and association than currently exists, or we are heading toward European dissociation or disengagement to a level which we had thought was behind us. I do not see how the 'middle way' can stay the course as the crisis develops, regardless of whether the peripherals restructure their debt or not.

By the way, in terms of disengagement I mean 'we' in terms of Ireland, not the Eurozone as a whole. Integration would, on the other hand, be more likely to involve the entire zone.

hinault

mirwillbeback wrote: »

Hi all,

Not a regular contributor to this particular forum, normally choosing to distract myself from the position we are in by focussing on sport.

But I have to ask as I am really getting pretty anxious, worried and downright scared. Is there a way out of this economic mess.

I work in a bank ( pretty low level ) and can tell you the volume of work is absolutely frightening. Were I to lose my job I would have no idea what else to do. I've no trade and all I have is bullsh!t experience of how to look important in a crappy industry. I was at a meeting the other day where it was discussed what would happen were the Irish to withdraw from the euro and " how the bank could protect employees were there to be rioting on thr streets " :eek:

I've two young boys, a gf and a house. Luckily we are relatively ok but I fear so much for my, and especially the boy's future.

So I want to ask you guys in the know - is there a way out of this. Is there a realistic chance of bankruptcy and what will that mean for families. Will the country stop to function, will all industry cease?

Might be getting in a panic for nothing, but would like to see what you fellas think.

Cheers

I think an awful lot of people throughout this country are very worried just like you are.

It is extremely difficult to know what the outcome will be to the financial crisis engulfing this country at present.
All of the commentary suggests that things are bad. The only point of disagreement is the degree to which things are bad.

In that context, it is best to try to be as prudent as you can in the circumstances.
If you have spare cash you need to decide if that cash is better utilised by paying down debt or keeping it to hand for "a rainy day".
Your own circumstances should inform you as to which option is better.

Personally as regards my mortgage, I am only paying down what I owe.
I have spare cash but I'm not prepared to repay my mortgage more quickly because I don't know if my lender will be there next month/year. But that is my individual decision. Others in my position might decide to do something else.

Scofflaw

Nijmegen wrote: »

The country going bankrupt will happen, it's the assumed logic of any financial press outside of Ireland. We're as deluded about our soft landing as we are about it.

However - and this is my main point - the sun will rise in the morning afterwards.

Basically, yes, in both bad and good ways. If you were in debt in August 1939, then despite the deaths of millions, the destruction of several countries, and the use of atomic weapons in between, the bank would still be chasing you for the debt you hadn't paid off come January 1946.

In the event of something like a default - a disorderly, unilateral, serious default - nobody knows what will happen, because for that to happen, a wide variety of other things have to go very pear-shaped first. First and foremost, the scenario is less likely, because there isn't really a pressing need to default for at least as long as we're being funded by the EU and IMF - and if we are going to have to default, it will be because they refuse to continue funding us and we can't access the markets in order to roll debt over. However, the reason they're funding us is in order to avoid exactly that situation, which makes it unlikely. Which leaves the possibility of the government deciding to default, which seems equally remote. So, as far as I can see - and it's just an opinion - default in that sense is highly unlikely. A managed restructuring, on the other hand, seems reasonably possible, but that doesn't have the exciting side-effects of a disorderly default.

cordially,
Scofflaw

Permabear

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Nijmegen

Scofflaw wrote: »

Basically, yes, in both bad and good ways. If you were in debt in August 1939, then despite the deaths of millions, the destruction of several countries, and the use of atomic weapons in between, the bank would still be chasing you for the debt you hadn't paid off come January 1946.

In the event of something like a default - a disorderly, unilateral, serious default - nobody knows what will happen, because for that to happen, a wide variety of other things have to go very pear-shaped first. First and foremost, the scenario is less likely, because there isn't really a pressing need to default for at least as long as we're being funded by the EU and IMF - and if we are going to have to default, it will be because they refuse to continue funding us and we can't access the markets in order to roll debt over. However, the reason they're funding us is in order to avoid exactly that situation, which makes it unlikely. Which leaves the possibility of the government deciding to default, which seems equally remote. So, as far as I can see - and it's just an opinion - default in that sense is highly unlikely. A managed restructuring, on the other hand, seems reasonably possible, but that doesn't have the exciting side-effects of a disorderly default.

cordially,
Scofflaw

You are quite right. I daresay a 'managed default', or whatever flowery word we use, will be the outcome. But Ireland is in for a decade or more of stagnation while it is all being unwound.

hinault

Scofflaw wrote: »

In the event of something like a default - a disorderly, unilateral, serious default - nobody knows what will happen, because for that to happen, a wide variety of other things have to go very pear-shaped first. First and foremost, the scenario is less likely, because there isn't really a pressing need to default for at least as long as we're being funded by the EU and IMF - and if we are going to have to default, it will be because they refuse to continue funding us and we can't access the markets in order to roll debt over. However, the reason they're funding us is in order to avoid exactly that situation, which makes it unlikely. Which leaves the possibility of the government deciding to default, which seems equally remote. So, as far as I can see - and it's just an opinion - default in that sense is highly unlikely. A managed restructuring, on the other hand, seems reasonably possible, but that doesn't have the exciting side-effects of a disorderly default.

cordially,
Scofflaw

Excellent analysis,scofflaw.

For what it's worth I think you're correct and that a disorderly default (that is a unilateral decision taken by an Irish government to not repay debt) is high improbable.

An orderly default (where the government meet and agree with it's creditors aka bondholders/ECB to not repay part of the debts owing to creditors) might happen.
An orderly default will only take place if the creditors who're owed money agree to such a default.

later12

Nijmegen wrote: »

You are quite right. I daresay a 'managed default', or whatever flowery word we use, will be the outcome.

It is not a question of floral language, it is a legal and a practical concern.

There are legal differences between bilaterally rescheduling a debt instrument, whereby the treasury literally just tweak a few serial numbers to make themselves look busy, and actually defaulting hard on paper in a way that would be declared a credit event or 'event of default'.

The latter could call due outstanding sovereign debts, probably instigate a major credit default swap crisis. The voluntary exchange, however, would simply extend maturities and probably keep the coupon values the same.

Prakari

1. Have at least a month’s supply of food. Given that people pay large amounts of money to insure their home, there’s no reason why you shouldn’t spend a little to insure yourself against food shortages in a severe economic/currency crisis.
2. Invest a proportion of your savings in gold or silver. Any currency linked to an economic area which is heavily indebted is vulnerable to severe inflation (possibly hyperinflation). This includes the U.S. dollar, the British sterling and the euro. These economies have got to a debt saturation point whereby new loans are producing very little economic growth because so much of these loans are getting sucked out of the system through debt payments. This leads to a positive feedback cycle whereby new loans are needed to service the old loans but even newer loans are then needed to service these new loans. It becomes a Ponzi scheme of paying for debt with debt while a decreasing degree of economic activity is stimulated in the process. By investing in precious metals you not only benefit from the inflation of fiat currencies (money printing will be needed once the bailouts stop working) but also from the uncertainty generated as these currencies start to slide.

Even though the human race has never been as wealthy in real terms (e.g. technology, food, oil), due to the malfunctioning monetary system combined with large scale bailouts we are about to experience the greatest economic crash in history. We should have experienced a crash in 2008, purged excessive debt from the system through large scale default and now be on our way to recovery. Instead we will experience a year or two of stagflation followed by the mother of all economic crashes.

Some of the signs to watch out for prior to the crash:
1. Emergence of huge losses in Spanish banks
2. The Chinese drastically reducing their purchasing of U.S. treasuries
3. OPEC no longer accepting U.S. dollars for oil
4. Large increase in the rate at which precious metals are appreciating

Owldshtok

Prakari wrote: »

1. Have at least a month’s supply of food. Given that people pay large amounts of money to insure their home, there’s no reason why you shouldn’t spend a little to insure yourself against food shortages in a severe economic/currency crisis.
2. Invest a proportion of your savings in gold or silver. Any currency linked to an economic area which is heavily indebted is vulnerable to severe inflation (possibly hyperinflation). This includes the U.S. dollar, the British sterling and the euro. These economies have got to a debt saturation point whereby new loans are producing very little economic growth because so much of these loans are getting sucked out of the system through debt payments. This leads to a positive feedback cycle whereby new loans are needed to service the old loans but even newer loans are then needed to service these new loans. It becomes a Ponzi scheme of paying for debt with debt while a decreasing degree of economic activity is stimulated in the process. By investing in precious metals you not only benefit from the inflation of fiat currencies (money printing will be needed once the bailouts stop working) but also from the uncertainty generated as these currencies start to slide.

Even though the human race has never been as wealthy in real terms (e.g. technology, food, oil), due to the malfunctioning monetary system combined with large scale bailouts we are about to experience the greatest economic crash in history. We should have experienced a crash in 2008, purged excessive debt from the system through large scale default and now be on our way to recovery. Instead we will experience a year or two of stagflation followed by the mother of all economic crashes.

Some of the signs to watch out for prior to the crash:
1. Emergence of huge losses in Spanish banks
2. The Chinese drastically reducing their purchasing of U.S. treasuries
3. OPEC no longer accepting U.S. dollars for oil
4. Large increase in the rate at which precious metals are appreciating

This leads me to a very simplistic 'laymans' question about economics.Where did all that credit and wealth created in world economies in the last decade come from and where did it go? Is it like the tide or something? has anyone got a link to something academic that illustrates what/where economic tides come from and go to?

So,does anyone on here care to put up a counter argument to Prakari's dire prediction?

Permabear

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WalterMitty

hinault wrote: »

Excellent analysis,scofflaw.

For what it's worth I think you're correct and that a disorderly default (that is a unilateral decision taken by an Irish government to not repay debt) is high improbable.

An orderly default (where the government meet and agree with it's creditors aka bondholders/ECB to not repay part of the debts owing to creditors) might happen.
An orderly default will only take place if the creditors who're owed money agree to such a default.

Disorderly default due to unilateral irish gov actions would only happen if the likes of richard boyd barrett or Sinn Fein were holding the balance of power.

andrew

An Irish (or Grecian) default would mean the end of the euro. So, before you think about the likelyhood of Ireland leaving the euro, think about the incentives which many countries have with regard to ensuring the stability of the euro. AFAIK, leaving the euro is a remote possibility. That private companies *(well...mostly private)* are planning for such an eventuality isn't significant.

later12

andrew wrote: »

An Irish (or Grecian) default would mean the end of the euro.

Well it depends what you mean by default there, but that is not strictly true.

Greece could offer longer term floating bonds with a spread over Euribor in swaps against fixed paper and many would call this a default... possibly/ hopefully not an "event". It wouldn't necessarily bring down the euro as long as it were not a default event. The end of the euro would only really arise if the pain involved in sustaining a viable exchange rate is too large for both defaulter and non defaulter, and that is not yet set in stone, but most would say that some form of default is.

Anonymous1987

Permabear wrote: »

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Investment in "gold and other metals" is as much "paper wealth" as investments in houses, the difference from the investors point of view is their liquidity.

Regarding the western ideal of social democracy, there are certainly issues as you have mentioned however a high expenditure, high taxation fiscal policy is not necessarily a prerequisitve to fiscal mismanagement.

irishh_bob

Permabear wrote: »

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dont mean to ask you for free financial advice permabear but IYO , is the recent offloading of gold by george soros a sure sign that the metal is in serious bubble territory , apart from this expert investor having exited , the fact of the matter is , gold has seen a bigger boom since around 2001 than the housin market in ireland ever did , silver had a huge sell off in early may , perhaps gold will soon follow suit

Davekoolhill

What would people think about going back to the Punt?

beeftotheheels

Davekoolhill wrote: »

What would people think about going back to the Punt?

Daft, daft, daft!

later12

Davekoolhill wrote: »

What would people think about going back to the Punt?

About the same as I would think of converting my money into ice cubes.

KindOfIrish

Permabear wrote: »

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Just been to Germany and Danemark. It is not.
It is Anglo American capitalism style has finished this country.

Permabear

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Permabear

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RichardAnd

Permabear wrote: »

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So what's the solution? I mean that genuinely, I'm not being sarcastic or anything of the sort.

I honestly don't see a simply way out of any of this. Indeed, it might be the case that the social systems in place are so ingrained that taking the whole thing apart would be akin to unscrambling an egg. On one hand, we have too many people living too long but at the same time, there are too few jobs for those in their youth.

Perhaps Mr Malthus was correct?

redux

The opinions are so varied these days, the only surety is whatever happens, will happen!

I have lived through ( mature years!) every kind of economic up and down and the one thing I have learned is, it is a rare politician that knows more than you or I.

This is definitely the worst time of all and the fear from our politicians is palpable. They really do not know what to do, but they do know we cannot pay the bill.

We are inexorably approaching the end game and an "orderly default" will be as likely as the "soft landing" all the experts promised.

Best plan of action now, if you have any spare cash stick it under the mattress and stock up your bunker.
On the other hand, as all opinion is subjective, be optimistic, blow what cash you have and have a ball.

later12

Permabear wrote: »

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First of all you can certainly depress its value. Have you never heard of what used to be the London gold pool? Central banks and bodies like the CTFC today can manipulate gold prices if they so desire.

I would not compare gold to houses, but the ironic thing is you could use this exact same argument as you have used above for buying land.

In the same way that commodities and housing have enhanced land prices, commodities and jewelry have traditionally enhanced gold.

Like housing, jewelry is now finding disfavour in the wealthy economies and what with growing concern about the boom in the emerging economies, and the return to austerity in the west, we have to ask ourselves what is going to catch gold prices in the event of a collapse? Unlike other proxy currencies like land, gold has no industrial use nor any physical relationship with commodities, and now its traditional floor has been diminished.

It doesn't make sense to make a point of how gold can be depressed the point is that human behaviour does depress or enhance the value of gold - particularly austerity, the movement away from gold as a resource in the wealthy economies, and the health of the emerging economies of places like Brazil and India. These issues are arriving very much to the fore and are just as relevant as Asian credit and subprimes in Ohio ultimately were to land prices in Roscommon.

Secondly, gold has served as both a form of currency and a store of wealth since the dawn of human civilization. It's highly unlikely, given this long precedent, that we will suddenly turn around and regard this metal as being as worthless as Bank of Ireland shares. Not going to happen.

I don't think anybody is suggesting that gold will go to BKIR shares, but you're actually using a very similar way of thinking as those who looked at the historical graph and always presumed that BKIR would be safe, in large part just because it always had been.

The dogs in the street practically advise us to buy gold, and it is at such a point that I start to become cynical.

Joe Kennedy supposedly predicted a stocks crash when he received trading advice from a shoe shine boy. I recently heard a Dublin man say he predicted the Irish crash when he saw a taxidriver taking fares in a Bentley. Very often many of us find ourselves chatting to an average punter who doesn't know a lot about investments, but thinks we should all be buying gold before it's too late. Now where have we heard that before?

Taxi Drivers

We're ok until the middle of 2013 because of the EU/IMF package. By that stage we may be able to raise some funds from private markets. I don't think it would be much but if things have stabilised sufficiently then there will likely be an expansion or extension of the EU/IMF deal. We need to get to the stage where we stop creating new debt and only need funding to rollover existing debt.

It looks January 15th 2014 is the date we have to be preparing for. Nearly €12 billion of our bonds mature on that date. If we have the money to repay these (from whatever source) and have the deficit under control we do not have to repay bonds again until Apr 2016. The following extract is take from here.

... the start of 2014 is a crucial time when projecting Ireland’s public finances. On the 15th January 2014, €11,857 million of government bonds are due to mature. As things stand we will not have the money to repay these bonds.

If you look at the schedule of outstanding bonds you will see that these bonds have the highest yield. At the close today (27/05) the yield on these bonds was 13.12%. The next bond redemption date after that is not until April 2016 when a further €10,168 million of bonds mature and these have a current yield of 11.81%. This is still in the stratosphere but the big problem we face is the €12 billion of bonds due to be repaid at the start of 2014.

If we get over that we have nearly two and a half years until the next redemption date for government bonds falls due.

Black Swan

Permabear wrote: »

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"Skyrocket?" Is there a gold bubble? Subtracting the symbolic value, what remains is the mineral value, and 1500 USD for gold appears overvalued, compared to silver at 38 USD. Warren Buffet bought silver rather than gold during his historic purchase before the Great Recession became official, because it had mineral value for electronics that was close to its symbolic value at the time. But even silver appears to be overvalued today, so perhaps there is a silver bubble too? Anyone know the current price for Dutch tulips?

Nijmegen

I think that focusing on gold is a newbie investors trick - There are plenty of other 'relatively safe' havens out there. If you invest in anything you risk it losing value, though the trick is in how much - Gold has gone up a long way, and it follows that there is a risk of it coming down a long way.

A smart investor has a wide portfolio.

Permabear

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irishh_bob

Permabear wrote: »

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do you think thier is a psychological barrier which gold cannot break through , when silver reached 50 dollars an ounce in early may , it dropped back to 35 dollars per ounce within ten days , it reached 50 in 1980 aswell and many believe this was what gave such significance to the 50 dollar mark , do you think the same mindset could surround gold , we,ve heard predictions of 2000 dollars per ounce by the end of the year although i remember hearing that in the third half of 2010 by one so called expert on bloomberg or cnbc , gold is an emotional driven investment like many others , people are bound to get flaky when it crosses a certain threshold , i heard jim rogers on tv a few weeks back , saying that hes got lousy timing for knowing the top and that the only thing he was sure about was that gold will keep going up in the long term but that in between thier would be large dips and pull backs , baschically , his point was that gold shouldnt be seen as a short term punt , i think

Ben D Bus

RichardAnd wrote: »

So what's the solution? I mean that genuinely, I'm not being sarcastic or anything of the sort.

I honestly don't see a simply way out of any of this. Indeed, it might be the case that the social systems in place are so ingrained that taking the whole thing apart would be akin to unscrambling an egg. On one hand, we have too many people living too long but at the same time, there are too few jobs for those in their youth.

Perhaps Mr Malthus was correct?

As the ratio of workers to pensioners heads towards 1:1 could we see a radical shift in immigration policy in Western countries? A relaxation of barriers to encourage inward migration of working-age adults and their children? The direction in migration at the moment between the West and the BRIC countries is strongly one-way in spite of the growth in their economies. There would be little difficulty at the moment in attracting inward migrants to restore a more sustainable ratio of workers to pensioners.

later12

Permabear wrote: »

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The national land price for 2010 was down 14.5% on 2009.

The point is not that prices are still falling, however, the point is that your first argument in favour of gold stability was that supply is steady.

Now there are lots of arguments in favour of gold, but that is not a serious one. As we have seen with land prices over the past four years, it doesn't really mean anything. Just like land, the value of gold can be and is constantly depressed or enhanced by human behaviour, and it can be manipulated. Like gold, it has traditionally been seen as a safe asset class, but tell that to someone who invested in 2009 and already sees a 14.5% drop in value.

irishh_bob

later10 wrote: »

The national land price for 2010 was down 14.5% on 2009.

The point is not that prices are still falling, however, the point is that your first argument in favour of gold stability was that supply is steady.

Now there are lots of arguments in favour of gold, but that is not a serious one. As we have seen with land prices over the past four years, it doesn't really mean anything. Just like land, the value of gold can be and is constantly depressed or enhanced by human behaviour, and it can be manipulated. Like gold, it has traditionally been seen as a safe asset class, but tell that to someone who invested in 2009 and already sees a 14.5% drop in value.

land prices are only holding firm because all sectors of farming are booming right now , that wont last , land is still about 30% over valued , its still more expensive than it was in 2001 and the broader economy was in a tad better shape back then aswell as the banks

later12

Yes I agree, I think land will fall further. The point isn't particularly the price of land though, it is that asset classes whose supply is stable are not necessarily stable themselves and investments in these asset classes are only reflections of paper wealth until you release them.

Permabear

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later12

Permabear wrote: »

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Of course it isn't meaningless. It reflects the value of traded land on the Irish market in an accurate way. A theoretical valuation of non traded land is what would be meaningless.

The Farmers Journal survey only considers land actually traded, without factoring in that much of the land sold over the past couple of years is of very poor quality.

On what basis are you suggesting that, and define 'much'? I could say 'much' of the land in Ireland is off poor quality, but it is such a vague statement that it is meaningless.

For me personally, it means that my net worth has more than doubled inside two years. That is hardly meaningless.

That's fine but not remotely relevant. Land prices have fallen in four years, gold prices have risen. Both might typically be seen as relatively stable asset classes, but neither have been stable up to now, and both only reflect paper investments. Gold in particular has no marketable cushion should its value collapse and I am afraid there are a lot of people out there who see it as a miracle investment in the same way they previously saw land.

Name one asset class that is independent of human behaviour and free from manipulation?

There is no profitable asset that is so, that is the point, and I didn't say there was; quite the opposite.

beeftotheheels

Permabear wrote: »

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Unless I am living in a unique area this is not only vague but also patently untrue. Around here two things drove the bubble. One was farmers being able to sell sites for silly money and reinvest it in agricultural land, but the other much larger factor around here was outsiders (property developers etc) buying land that came on the market, often the old "protestant" farms with big houses etc.

By accident or design this latter group bought a lot of good land, and have been forced to deleverage since 2008 so this "good land" has come back on the market much more so than the 10 acres here and the 35 acres there bought by the more traditional adjacent land owner when the land usually only comes back on the market when the farmer dies and his offspring stop talking to each other.

Permabear

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later12

Permabear wrote: »

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This "national land price" is meaningless.

Ok look this is a blatant case of switching tack... a few posts ago you were posting how the national price is €8000 - €10000 in the acre and have remained stable.
Now presumably you are getting this from somewhere, and if the national land price is meaningless and the farmer's journal survey for 2010 is not to be trusted, where, exactly are you getting it?

I have also asked you to clarify (a) what you mean and (b) from where you are deriving the observation that "much of the land sold over the past couple of years is of very poor quality." Because going through the FJ reports, I'm not seeing that as the case.

It isn't even clear what exactly your point is here. Are you suggesting that land is more stable than these reports have been letting on? Are you suggesting that where productivity driven price differentials are not a significant feature, that land values in other countries have not shown significant fluctuations in the past?

The fact is that land prices worldwide have fluctuated widely in the postwar era. The United States saw huge appreciations in the 70s and depreciation in the 80s not unlike what has been witnessed in Ireland. There is also evidence that land prices can be linked to risk aversion, just like gold. Like gold it is subject to human behaviour, manipulative market practices, and instability. It is in this light that I am agreeing with the poster who pointed out to you that counting one's wealth is gold is merely a paper exercise not unlike the midlands farmer counting his wealth in acreage four years ago who has now seen his investment halved.

Tech stocks, Irish land, and gold have all been disparaged over the past 13-odd years as fools' investments.

I wouldn't include technology as a fool's investment. But certainly, it would be fair to say that you'd have a hard time finding many traders, in commodities or otherwise, who consider gold an intellectual or a particularly clever pursuit, yes.

Permabear

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irishh_bob

the farmers journal is known for focusing on the high price sales of land , IMO , land is even cheaper that being reported at the moment

beeftotheheels

If we look at how we account for assets on a balance sheet we distinguish between those which are intended to be held long term, and those which are available for sale. We account for the former at cost, and the latter at fair market value.

The average farmer who buys with no intention of selling at a profit would account at cost, the investor such as Permabear could account at FMV (were they subject to accounting standards).

In accounting terms Permabear can book the "paper profit", Paddy McHugh who bought his neighbors 7 acres (which also gets his land access to a stream because his well has been running dry in recent dry summers/ pump freezing in cold winters) cannot.

This is why the "paper" price of land is irrelevant to most farmers, they don't count their wealth when it goes up, they don't count their losses when it recedes. They simply farm their land.

later12

Permabear wrote: »

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[/I]
Yes, that's exactly what I'm suggesting.[/QUOTE]
Based on what evidence? And I still don't understand why you were using its figures earlier, or where did the €8000 figure come from?

Is there any method of counting wealth that is not "merely a paper exercise"? If so, can you explain further?

But that is the point!

It has been pointed out to you that gold investments are as much paper investments as investing in property or land. You're even using similar arguments that those who defended property right up to the end... the supply of land is finite/ the historical graph shows property as a store of wealth when in fact in neither case is or was the graph stable, and in both cases serious losses have arisen in the past.