Was the Tiger really that great?

JimmyVik

https://www.boards.ie/discussion/comment/118318935#Comment_118318935

I remember hearing it from various people from 2001 on. I even joined in myself. Everyone had an opinion one way or the other. Nobody actually knew though. And the only person i'll believe had some skill, other than a guess, would be the ones who are sitting retired on their fortune now :)

As an aside, i worked with a guy whose granny died and left him 6 rental houses, 2 big ones with loads of flats in them on grosvner square in rathmines in 2005. I told him he should keep them and make a fortune with the rent. He sold them all straight away because he figured he could just retire on the cash and didnt want to be looking after properties. How lucky was he. Last I heard he is still retired and living it up in Florida.

JimmyVik

https://www.boards.ie/discussion/comment/118319208#Comment_118319208

I have a friend who bought 4 houses in the 2000s and when the crash happened he had to go on interest only even on the house he was living in, but wasnt allowed to on the investments and was subsidizing the rents.

I felt really sorry watching himself and his family going from being affluent to struggling. I was down visiting a while ago and they are on the pigs back now. Mortgages all nearly paid off. Rents very high. Own house back on track. In fact i think they are better off now than they were in the tiger, but there were a few years that it looked like their lives were ruined. Amazing how cyclical it all is. If they had sold and carried the debt they would still be boll!xed, but once they survived the lean years they are even better off.

Ray Palmer

https://www.boards.ie/discussion/comment/118319582#Comment_118319582

It is not financially viable due to the difficulties. I did say it was possible but so difficult here. Compare the repossessions in Ireland to the rest of Europe and it is clear that our processes are not fit for purpose. It is why our interest rates are higher here.

Only a minor point out the explanation that there is no way it was a plan to raise house prices. Prices rose but the causation attributed to a international scheme to push up property prices in Ireland is just absurd and there is absolutely no proof. I would say over half the population do believe this none the less as they like to think themselves victims of some authority due to the post colonial chip on their shoulders.

Wanderer78

https://www.boards.ie/discussion/comment/118318701#Comment_118318701

yes, the global financial system moved as a unit, this ultimately started back as far as the 70's/80's, but truly took off in the proceeding decades, it moved towards strong lobbing of governments globally, in order to deregulate its sector as much as possible, making it a far more powerful entity, far more powerful than the governments themselves, and it worked....

possible negative outcomes were of little or no concern, as long as the sector as a whole gained more power and control, it used its ability to simply create credit, as much as possible, with great ease, and done everything in its power to encourage asset fueled bubbles, globally, the most obvious in property markets.

the financial system as a whole didnt actually care what the outcome was, as this process triggered a whole pile complex human actions and reactions, it ultimately became a frenzy, we also largely thought there was never going to be any downsides, simply ignoring history, yes, this type of behavior occurred in the past, i.e. the 29 crash, leading to the same outcome!

this approach makes perfect sense, if theres effectively little or no downsides to the outcomes, plough on!

our banking issues were all a part of the global financial crash, more or less the same story, lobbying of governments to deregulate, encouragement of increasing the credit supply, and the rest is history.... oh our government is still actually playing this game....

oh a part of that lobbying is to make sure you 'defund' and discourage the states ability to regulate all of this.....

HerrKuehn

https://www.boards.ie/discussion/comment/118319637#Comment_118319637

Well some people will have done really well and timed it, even less inherited a property portfolio in Rathmines. It was impossible to tell if/when it would crash, but the signs were definitely there in 2007, prices in certain areas had already begun dropping. Now the government could have stepped in with some harebrained scheme like negative gearing as they have in Australia and that would potentially have changed the situation and kept it going.

If I understood correctly, you were in a position to buy during the bubble but didn't. What informed your decision?

JimmyVik

https://www.boards.ie/discussion/comment/118320034#Comment_118320034

I thought from 2001 that the only way was down. I wasnt clairvoyant or anything. And although eventually i was right, like a stopped clock, looking back, i would have been better off having bought a house at any point up to the crash. Turned out I was too careful. But my track record in timing markets isnt the best at all to be fair :)

Ray Palmer

https://www.boards.ie/discussion/comment/118319768#Comment_118319768

so no proof of how this was done here. You ignored the ECB and the lack of control the Irish government had on changing the interest rate which is how they would have handled it in the past. You are just making claims but not a single shred of proof. Either the Irish banks orchestrated it to happen here or they didn't. Global financial institutes do not have the ability to move as a unified unit and are actually competing with each other. Everything use spout requires so much coordination against competing interests to be akin to the belief the world governments are hiding the existence of aliens.

Were you old enough during the celtic tiger years to be in the market for a house? How are the banks controlling house prices now? What regulation was removed in Ireland to allow the banks to behave as you claim in Ireland?

Fraud was one of the biggest causes of the crash in 1929 which had a knock on effect due to US loans for central Europe. I do agree financial institutes don't really care about the outcome but it much easier to believe they acted recklessly rather than a coordinated effort.

You are ignoring what the public were doing and saying at this celtic tiger years. The public were demanding 120% mortgages to be allowed People were remortgaging to buy cars and TVs. People who grew up in poor Ireland of 70s/80s were used to paying for things like TVs, cookers etc... with credit so extended themselves for "luxury" items. The people took credit and went looking for it and they are ultimate responsible for those decision on a personal level. People like to blame some higher power and make up what happened to ease their own guilt

Wanderer78

https://www.boards.ie/discussion/comment/118320369#Comment_118320369

its important to realise how powerful human behavior can be, entities of this were planned, but most probably not, when humans come together with clear goals and objectives such as 'maximizing utility', 'maximizing shareholder value', 'maximizing profits', etc etc etc, it sets off a whole pile of complex outcomes and human behavior, such as 'Gresham's dynamic', and as economist bill black would say, this leads to a situation whereby, 'bad ethics drives good ethics out of the market'. this is exactly what happened on a grand scale globally, particularly in the fire sectors, the primary sectors at the heart of the crash.

proof! theres tons of proof there!

yes, central banks also played a critical role in this fcuk up, by maintaining low rates, and by providing licensing to this kind of behavior, most financial institutions require central bank licensing, in order to exist.... central banks were also too busy with their own pet project, i.e. creating the not so 'great moderation'....... conveniently ignoring the gigantic credit frenzy that was occurring globally! maybe its to do with the fact, most of these institutions are supported by neoclassical economic theories and models, whereby banks, credit, money and debt are largely ignored..... and still largely is.... baring in mind, private debt, created via credit creation by these banks, is actually at an all time high in human history......

oh its also important to realise, banks support banks all the time, they regularly loan to each other, in order to maintain the status quo, yes there is competition between them, but theyre really butty butty underneath it all, but when the time comes, theyd easily cut each others throats also, if needs be.....

its important to realise how critical security of accommodation is to human existence, even our cavemen ancestors realised this, we have financialized the whole process, this in turn is elevating human anxieties towards this critical need, causing humans to behave in a very irrational and somewhat dangerous manner, all this in turn just causes prices to continually rise, as we try out bid each other for this critical need, and we use what ever resources we can to do so, particularly our access to credit, as credit is still the main source of money used to build and purchase, and again, credit comes from credit markets, i.e. banks....

....ah typical libertarian sh1te, i.e. 'its the fault of the individuals', but lets conveniently ignore the systemic failures!

HerrKuehn

https://www.boards.ie/discussion/comment/118320593#Comment_118320593

This seems to be a random mashup of conspiracy theories along with a misunderstand of a 1st year Economics textbook. You seem to ascribe no agency to individuals in your world, they are just mindless automatons.

I am assuming the answer to Ray's question regarding being old enough during the bubble, is no. If you were old enough, you would remember the greedy behavior of individuals. The government at the time could have introduced mortgage cap rules, but it would have been incredibly unpopular with voters.

Ray Palmer

https://www.boards.ie/discussion/comment/118320593#Comment_118320593

You have given absolutely no proof you spouted belief. You seem to ignore your own human behaviour of seeing a pattern where none exists. You are claiming the result you see as having a cause you can't prove. Why is that not relevant but your other beliefs about human nature are applied correctly.

People make the claims about banks without any of the understanding of economics you appear to have read. Those people who believe you don't know or understand what you but will make the exact claims about banks being at fault. Having people agree is not hard if they want to believe it.

I know individuals who did very stupid financial gearing that they didn't understand. As individuals are they not responsible for their own individual circumstances? What is the logic of not being responsible for your own actions? When they start blaming the banks for their own actions I don't let them away with it because we discussed the risks at the time. Then they claim the banks did it to them. Nonsense they gambled while ignoring the risk

I notice you didn't answer whether you were an adult during the celtic tiger years. How are the banks controlling price now? What was the banking regulation removed in Ireland as you claim to banks? Your claims have no support but a general economics theory and a vague understanding of how banks work. You have provided no proof and fail to answer simple questions. Don't misunderstand people agreeing with you to whether it is true or not. Human nature is not to take blame for your own mistakes if you can blame somebody else or some higher power. Where do you think religions and cults came about. I have the definite impression this is all academic reading from you as opposed to seeing what people were doing.

Blackjack

https://www.boards.ie/discussion/comment/118319699#Comment_118319699

Worth noting (according to the data here) that as at the end of September, 15,078 mortgage accounts or 2% or the 722,886 mortgage loans outstanding were in arrears over 5 years, with 5,430 of those in arrears over 10 years.

During Quarter 3, there were a total of 7 properties repossessed on foot of an order, and a further 20 that were voluntarily surrendered or abandoned. And yet there are bullshitters telling us about tsunamis' of repossessions and the likes.

Timing belt

https://www.boards.ie/discussion/comment/118320593#Comment_118320593

oh its also important to realise, banks support banks all the time, they regularly loan to each other, in order to maintain the status quo, yes there is competition between them, but theyre really butty butty underneath it all, but when the time comes, theyd easily cut each others throats also, if needs be.....

Banks were not supporting each other they loaned to each other because they had excess liquidity and got a better return from another bank rather than putting it on reserve with the central bank and being penalised for for depositing to much with the central bank.

This whole process was by design of the central banks.

This whole inter bank market went tits up once the liquidity dried up and banks stopped lending to each other which amplified the stresses in the financial markets and caused major banks to fail.

After this the central banks stopped penalising banks for depositing by removing interest corridors and started to act like a clearing house resulting in the inter-bank market shrinking massively.

Peppa Cig

https://www.boards.ie/discussion/comment/118321080#Comment_118321080

Why is it so difficult for banks to repossess homes in these cases?

Ray Palmer

https://www.boards.ie/discussion/comment/118322069#Comment_118322069

Irish law and application of law by judges

Peppa Cig

https://www.boards.ie/discussion/comment/118323901#Comment_118323901

The law exists and repossessions occur. The bit I don’t understand is why the volume of repossessions is so low compared to long term arrears….

Blackjack

https://www.boards.ie/discussion/comment/118326677#Comment_118326677

Generally it's a last resort for Banks. Despite what some might believe, they don't prefer to inflict misery and destitution on the populace, so they will endeavor to resolve the issue with the borrower provided the borrower is willing to engage. There is a cost to going through the courts for repossession of a property plus it's negative news - you'll always have the sob story and some people seem to be able to find the money for expensive lawyers and appeals once things go to court, but miraculously, can't pay the monthly repayment for years at a time. Others will barricade themselves inside their bog standard houses and have the support of various spoofers to assist with their PR. Plus its bad press - big bad bank going after poor retired couple in Killiney mansion tends to get people into a lather of outrage, ignoring the fact that they may be chancers that own loads of properties that they rent out, presumably collecting rent all the while, yet can't bother to pay their own mortgage, who then look to make a compo claim when their property is finally repossessed.

It's all a bit of a minefield really. In general it takes nearly 4 years to repossess a house in Ireland, compared to under 1 year in the likes of Denmark and the Netherlands.