What is the root cause of our present difficulties?

Ace Wall · 26-10-2010 09:01AM #1

What is the root cause of our present difficulties – bankers, politicians, developers or is it financial regulation, free market economics or simply unbridled greed? Without addressing the root cause/s, any solution is likely to be a sticking plaster which only offers a partial remedy but no lasting cure. Certainly how banks conduct their business deserves careful scrutiny because they have moved a long way away from commercial banking practices to what can only be described as gambling with other people’s money. However, I believe that a more fundamental issue is at stake that fuelled the property boom which has to do with land speculation. Land is the primary asset at the root of the Celtic Tiger which, with state complicity, was rezoned and traded at enormous profit by owners who added no additional value to the land – thus creating a “virtual” asset. There is a direct correlation between the rezoned added value of land and the negative equity of property today that points to the root cause of our present difficulties lying in land ownership. The solution, I posit, is the nationalisation of land as a permanent solution.

Let the government introduce a land tax, (rather than a property tax). If the land is nationalised then a nominal rent for the land is due. However, let the speculative value put on the rezoned land be deducted from the land valuation and the whole site value separated out from the mortgage owed on the house. Such a radical solution (radical because it goes to the root of the problem) would in effect be a NAMA for homeowners. The banks would obviously have to write down their loans. The state is already bailing them out but at least with this option, the government secures a revenue stream, order is restored in the property market and the root cause of the problem has been dealt with.

Your Pal Sal · 26-10-2010 09:05AM

GREED!! and I mean everyones greed not just anks and property developers

murphaph · 26-10-2010 09:17AM

us.

Echospace · 26-10-2010 09:23AM

Your Pal Sal wrote: »

GREED!! and I mean everyones greed not just anks and property developers

Greed can only destroy an economy if fiscal and social policy allow it to.

So the 'root' cause is more likely simply a banking system that allows banks to loan out more money than their deposit base covers.

femur61 · 26-10-2010 09:35AM

murphaph wrote: »

us.

Ditto.

Even if we didn't benefit from the "boom" I think an awful lot of people felt good seeing our TD's being driven around by drivers in their state cars. People for a while got out of the poverty trap, everybody had a chance to better themselves but we got above ourselves. We got greedy, the more houses we had, the newer the car/jeep, our kids got braces, sorry list goes on and is probaly boring people.

Unfortunately we have been given a reality check, we can’t go it alone.

Liam Byrne · 26-10-2010 09:50AM

Greed & profit, and from LOTS of people, but NOT "everyone".

The worst part is that the vested interests got in on the act and infected everything from politicians to lawyers to property supplements and TV shows.......even down to the retail stores selling TVs and appliances, charging double then what they do now. It also meant that we became completely uncompetitive, thereby infecting the whole economy at large, because everyone has to live somewhere.

Anyone who raised an eyebrow or recommended prudency was fobbed off as "tight" or "stingy" (or even told to top themselves).

So it's not "everyone", but it's not just the obvious suspects either, and the lazy blaming of everyone really gets on my goat.

scr123 · 26-10-2010 09:59AM

We can talk economics forever and we can talk root causes of economic problems forever and we can blame who we like and we can talk fiscal and financial till we are blue in the face. What we refuse to talk about are the 4 main indicators that have been around since economics became a serious subject 2 to 3 hundred years ago. The ideal indicators are:

Full employment
Growth
Stable prices (low inflation)
Favourable balance of payments

Now I am no expert on economics but I know for certain those 4 indicators have dominated economic discussions for decades. I also know for certain that inflation scares the wits out of governments and economists everywhere. I am also certain that when we push for growth, full employment and favourable balance of payments inevitibly a problem with inflation develops. A simple glance back in economic history will support this simple fact. Billions upon billions was pumped into the Irish economy over 10 years through expanded credit and low interest rates. We can argue about the rights and wrongs of this expansion but the benefits in many ways were enormous and are all around us. Every sale has a cost they say and the cost to us was massive debt and inflation. Not only inflated prices but grossly inflated expectations. Its payback time on the debt and its time to deflate our prices and expectations. The root cause of our problems is that we borrowed big money to expand our economy and gave us the biggest boom ever. We are going to lose a lot of our gains but we are going to keep most of the gains. The man on the street sees unemployment as the biggest problem but he fails to see that most of the jobs lost were boomtime jobs that would be lost the moment recession hit. From now on we have to consolidate our gains and use these to grow our economy without resorting to the same borrowing levels of the 10 years that gave us boom.
Whether we like it or not deflation is the name of the game and it will be with us for a few years. Inflation as always busted the economy and we have no choice but to bring it under control. people can play politics all they like but its all about economics stupid ! Now who said that before ?

Count Dooku · 26-10-2010 10:44AM

populism and reckless spending under smokescreen of left wing rhetoric

Permabear · 26-10-2010 10:51AM

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maninasia · 26-10-2010 11:08AM

Over confidence and lack of experience. This situation combined effects of over confidence with such an almighty boom had never arisen previously in Ireland, at least now there is history there that people can remember clearly for a long time. Having a boom, check is it sustainable or real.
Immaturity as a nation and as a people too.

I think there is no single root cause, rather a collection of a few fundamental factors. If people get the government they deserve then God help us.

murphaph · 26-10-2010 11:11AM

Liam Byrne wrote: »

Greed & profit, and from LOTS of people, but NOT "everyone".

The worst part is that the vested interests got in on the act and infected everything from politicians to lawyers to property supplements and TV shows.......even down to the retail stores selling TVs and appliances, charging double then what they do now. It also meant that we became completely uncompetitive, thereby infecting the whole economy at large, because everyone has to live somewhere.

Anyone who raised an eyebrow or recommended prudency was fobbed off as "tight" or "stingy" (or even told to top themselves).

So it's not "everyone", but it's not just the obvious suspects either, and the lazy blaming of everyone really gets on my goat.

I understand Liam. When I say "us" I mean Irish society. Unfortunately there are enough imprudent idiots out there to outweigh the minority of people who saw it coming. I saw this coming around 2000 when jobs in my sector began to be lost to Singapore etc. People I worked with were turning their hands to stuff in the building trade instead. It was clearly going to end in tears. But we as a society didn't act, therefore I maintain that it is "us" that are the root cause of all our ills.

bryaner · 26-10-2010 11:16AM

femur61 wrote: »

Ditto.

Even if we didn't benefit from the "boom" I think an awful lot of people felt good seeing our TD's being driven around by drivers in their state cars. People for a while got out of the poverty trap, everybody had a chance to better themselves but we got above ourselves. We got greedy, the more houses we had, the newer the car/jeep, our kids got braces, sorry list goes on and is probaly boring people.

Unfortunately we have been given a reality check, we can’t go it alone.

Pray tell what's wrong with kids getting braces to fix their crooked teeth?

maninasia · 26-10-2010 11:21AM

Everybody will have the same straight teeth and you won't see any cute smiles anymore.

bryaner · 26-10-2010 11:23AM

maninasia wrote: »

Everybody will have the same straight teeth and you won't see any cute smiles anymore.

Whatever your into, but I don't look on smiles with gammy teeth as cute.

kippy · 26-10-2010 11:26AM

The root cause(s)?
Money, greed and the lack of any regulatory controls on either.

Same root causes really of any financial meltdown in history.

We all got caught up in it to some extent, myself included.

As someone posted a few days ago,
it's not like we've turned into a third world country, we've a lot of financial pain to take and a chance to improve our political and regulatory systems and a potential will there to do if via the electorate, whether we take it is another thing.

maninasia · 26-10-2010 11:29AM

Well we all have different tastes..

jmayo · 26-10-2010 01:38PM

Liam Byrne wrote: »

Greed & profit, and from LOTS of people, but NOT "everyone".

The worst part is that the vested interests got in on the act and infected everything from politicians to lawyers to property supplements and TV shows.......even down to the retail stores selling TVs and appliances, charging double then what they do now. It also meant that we became completely uncompetitive, thereby infecting the whole economy at large, because everyone has to live somewhere.

Anyone who raised an eyebrow or recommended prudency was fobbed off as "tight" or "stingy" (or even told to top themselves).

So it's not "everyone", but it's not just the obvious suspects either, and the lazy blaming of everyone really gets on my goat.

Very well said.

bryaner wrote: »

Pray tell what's wrong with kids getting braces to fix their crooked teeth?

Maybe it was wrong when we were paying collosal fees to a monopoly called our dentists.
Of course they cited higher rents, although I didn't know they were that many multiples higher than those across the border.

kippy wrote: »

The root cause(s)?
Money, greed and the lack of any regulatory controls on either.

Same root causes really of any financial meltdown in history.

We all got caught up in it to some extent, myself included.

Speak for yourself. Leave me out of your WE. :mad:
At Liam stated above it gets on my goat to hear this sh**e about how we are all to blame and we all got caught up.

I did not go out and buy overpriced property, I drove old cars and not brand new bmeers, convertibles or jeeps, I did not borrow to travel around the world.
I was often called a skint flint, an eejit for not being on the ladder and lost a few dates, because I wasn't up to my armpits in debts, but at least I am not now cribbing looking for personal NAMAs or how unfair it is to have to pay more tax since we have such debts.

kippy wrote: »

As someone posted a few days ago, it's not like we've turned into a third world country, we've a lot of financial pain to take and a chance to improve our political and regulatory systems and a potential will there to do if via the electorate, whether we take it is another thing.

It is a damm expensive way to improve our regulatory systems.
We knew for years about them being bad, we didn't need to highlight them in such an expensive fashion.

BTW you aren't the project manager from The Apprentice who saw not putting in the month of December on the calendar as an opportunity rather than a collosal f*** up ?

kippy · 26-10-2010 02:00PM

jmayo wrote: »

I did not go out and buy overpriced property, I drove old cars and not brand new bmeers, convertibles or jeeps, I did not borrow to travel around the world.
I was often called a skint flint, an eejit for not being on the ladder and lost a few dates, because I wasn't up to my armpits in debts, but at least I am not now cribbing looking for personal NAMAs or how unfair it is to have to pay more tax since we have such debts.

It is a damm expensive way to improve our regulatory systems.
We knew for years about them being bad, we didn't need to highlight them in such an expensive fashion.

BTW you aren't the project manager from The Apprentice who saw not putting in the month of December on the calendar as an opportunity rather than a collosal f*** up ?

You didnt have to go out and buy overpriced property to be part of it.
You, I am afraid to say, are part of the "We" whether you like it or not.
You benefited (I daresay) from the property bubble with reduced taxation on income, increased social welfare payments (if applicable) rental tax relief, new roads etc etc.
YOU WERE PART OF IT AS WELL.
People were more than happy to be taken along for the ride. If they weren't surely they would have done something about it, perhaps become a politician.
Becoming a keyboard warrior is not going to change things.

In fact, anyone in this country for the past number of years has been part of it, whether they wanted to or not.

Did you vote over the past 10 years?

So we knew for years? Indeed some may have, very few did and we did absolutely nothing about them but let the same policies pass for the way to run a proper country because WE ALL BENEFITED.

I am sorry if you dont agree with my summation, it's just an opinion.

No need for the low dig at the end btw.

SkepticOne · 26-10-2010 02:36PM

I get the impression that a lot of the people using "we" these days were those who were defending the banks prior to their collapse.

kippy · 26-10-2010 02:42PM

SkepticOne wrote: »

I get the impression that a lot of the people using "we" these days were those who were defending the banks prior to their collapse.

I use we because we all benefited from what was going on while it was going on, in some way shape or form.
Perhaps I am a wrong in saying we are all to blame but ultimatly we are because we are all going to pay for it in some way,shape or form.

If you felt strongly enough about what was going on you could have either:
1. Entered politics.
2. Put serious pressure on your local representatives.

Most didnt do either and keyboard warriors on this and other sites have, to be honest, become tedious at this stage.

jmayo · 26-10-2010 03:02PM

kippy wrote: »

You didnt have to go out and buy overpriced property to be part of it.
You, I am afraid to say, are part of the "We" whether you like it or not.
You benefited (I daresay) from the property bubble with reduced taxation on income, increased social welfare payments (if applicable) rental tax relief, new roads etc etc.
YOU WERE PART OF IT AS WELL.

Ah FFS lets then start blaming kids borne between 2002 and 2007 as well, since after all they benefitted from increased children's allowance and possibly a better road to the maternity hospital. :rolleyes:

kippy wrote: »

People were more than happy to be taken along for the ride. If they weren't surely they would have done something about it, perhaps become a politician.
Becoming a keyboard warrior is not going to change things.

In fact, anyone in this country for the past number of years has been part of it, whether they wanted to or not.

Did you vote over the past 10 years?

Some of us aren't suited or don't have the time to become politicans.
I would say it would be more the former in my case, since I have never had an interest in pretending to listen to people, smooching and spinning sh**e whihc are things necessary to getting elected around here.

BTW your argument is rather like the one being profered by people against protest, where it is often stated that before anyone protests they should have an alternative.

Yes I did vote, did you ?
I have no problem stating I never voted for ff and by extension endorsed their policies.
Oh and voting for the main opposition parties who also endorsed spending does not necessarily mean I endorsed the spendthrift policies of ff and their turning the economy into a get rich quick scheme whose main beneficaries were their supporters.

kippy wrote: »

So we knew for years? Indeed some may have, very few did and we did absolutely nothing about them but let the same policies pass for the way to run a proper country because WE ALL BENEFITED.

I am sorry if you dont agree with my summation, it's just an opinion.

No need for the low dig at the end btw.

Your "WE ALL BENEFITED" is using the same get out clause that has been resorted to by the actual creators of this whole mess and it is giving them a pass on their responsibilities.

It wasn't meant to be a low dig, but a joking way of viewing your optimism.
Although seen as you now forcefully reckon I am to blame since I just happened to have lived here I might say otherwise.

kippy · 26-10-2010 03:11PM

jmayo wrote: »

Ah FFS lets then start blaming kids borne between 2002 and 2007 as well, since after all they benefitted from increased children's allowance and possibly a better road to the maternity hospital. :rolleyes:

Some of us aren't suited or don't have the time to become politicans.
I would say it would be more the former in my case, since I have never had an interest in pretending to listen to people, smooching and spinning sh**e whihc are things necessary to getting elected around here.

BTW your argument is rather like the one being profered by people against protest, where it is often stated that before anyone protests they should have an alternative.

Yes I did vote, did you ?
I have no problem stating I never voted for ff and by extension endorsed their policies.
Oh and voting for the main opposition parties who also endorsed spending does not necessarily mean I endorsed the spendthrift policies of ff and their turning the economy into a get rich quick scheme whose main beneficaries were their supporters.

Your "WE ALL BENEFITED" is using the same get out clause that has been resorted to by the actual creators of this whole mess and it is giving them a pass on their responsibilities.

It wasn't meant to be a low dig, but a joking way of viewing your optimism.
Although seen as you now forcefully reckon I am to blame since I just happened to have lived here I might say otherwise.

So you are totally not to blame and have had no hand in or took part in the excesses of the past 10 years.
Fair enough.
I cant say that about myself.

I've voted and I've never voted based on a party or their politics, I vote based on the individual. I've voted green, FF, FG, IND and Labour at varying stages of the past ten years.
I dont particularily think the party politic/local politics in this country works but thats neither here nore there.

We let these things happen, we are partly to blame - that is ultimately where I am coming from.

People say a lot about personal responsibility in these situations, yet forget completely about it when blame is being handed out.

Do I think there were people who can take more blame than others? Of course I do but at this stage in the country we live in where WE the electorate have consistently let the powers that be pi55 all over us, I think blame is pointless directed at these people.

Ultimately WE ALL pay, whether we think we are to blame or not.

jmayo · 26-10-2010 05:12PM

kippy wrote: »

So you are totally not to blame and have had no hand in or took part in the excesses of the past 10 years.
Fair enough.
I cant say that about myself.

I bet you will find a fair few others aorund here who reckon they have not played a part in creating this mess.

kippy wrote: »

I've voted and I've never voted based on a party or their politics, I vote based on the individual. I've voted green, FF, FG, IND and Labour at varying stages of the past ten years.
I dont particularily think the party politic/local politics in this country works but thats neither here nore there.

I have always voted on party grounds since from an early age I had a mistrust of ff. I guess that is what you get growing up wondering how haughey got so rich and been told by ffers, or rather the ff kids who are your classmates that it was none of my business how he got rich.

kippy wrote: »

We let these things happen, we are partly to blame - that is ultimately where I am coming from.

Yes as a society we did let it happen, but I believe there is a difference in saying our society and saying every single member of it.

What were the choices for those that did not believe the hype, did not agree with the benchmarking, the wastage, etc ?
It is like the argument about why the opposition have not gotten rid of the government.
Because we have a democracy and we are not allowed kill people we disagree with, then it is impossible for a minority to change things in short term.

kippy wrote: »

People say a lot about personal responsibility in these situations, yet forget completely about it when blame is being handed out.

Ah come on that might be fair if you are talking about someone who ran up huge debts on property, cars, credit cards and now is trying to indulge in jingle mail.

I am personally responsible for my decisions.
I have always been personally responsible for my debts, but the sh** that has been pulled over last few years means that I am now personally partially responsible (thanks to biffo, lenihan and co), for the debts of some very rich connected people such as johnny ronan, bernie mcnamara, seanie fitzpatrick, david drumm, etc.

Yes I know we will have to pay in some way, but it gauls me like hell that those responsible for these massive debts get to protect their personal wealth through limited companies and transfer of funds to families, while at the same time the ordinary citizens get to carry the can for them.

To use a phrase of the left, "they have socialised the losses, but not the gains".

And yes I know that is only speaking of the difficulties due to our banking mess and not the difficulties with our current budget deficit.

That mess is down to how the government(s) managed the country and endeavoured to buy political success.

kippy wrote: »

Do I think there were people who can take more blame than others? Of course I do but at this stage in the country we live in where WE the electorate have consistently let the powers that be pi55 all over us, I think blame is pointless directed at these people.

Ultimately WE ALL pay, whether we think we are to blame or not.

Yes we do all pay, but it should be proportionate.
In other words why should I, and probably you, pay for the pensions of roddy molloy, patrick neary, john hurley to name just a few ?

Unless blame is apportioned fairly in some way, then you will indeed get people ranting against the system.
In this day and age you can't expect people to meekly agree to sacrifice themselves as canon fodder, all for the benefit of arrogant greedy idiots who caused the mess.

The ethos of no one taking responsibility in this whole disaster has been highlighted before in all the shocking stories eminating from the HSE.
No one is ever held responsible and it is always just a systemic failure.
It is about time blame started being levelled at individuals and not just some nameless entity.
And with the blame comes penalities.

kippy · 26-10-2010 05:51PM

jmayo wrote: »

I bet you will find a fair few others aorund here who reckon they have not played a part in creating this mess.

A very good and fair post.

Theres a fair few others around the country reckoning they havent played a part in creating the mess, none more so than Bertie and his cohorts.

Permabear · 26-10-2010 06:10PM

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fontanalis · 26-10-2010 06:30PM

I'd say the root cause was the lack of foresight of those in charge and not having competent people in charge in the first place. I still don't understand how some people couldn't see that somehting was up when Ireland went from an economic basket case to supposedly the richest country in the world in 20 years.

Permabear · 26-10-2010 06:35PM

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fontanalis · 26-10-2010 06:39PM

donegalfella wrote: »

This post has been deleted.

Yes, but it's the period around 2005 I was referring to, I can't find a link to the original story when it was announced that Ireland was named as the richest country in the world.

Yourwellcum · 26-10-2010 06:46PM

donegalfella wrote: »

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Unreal, you dont think greed was responsible for what has occured?? What a load of cobblers.

Bankers were greedy

Developers were greedy

Builders were greedy

Workers were greedy

Politicians were greedy

But yet somehow greed is irrelevant :rolleyes:

edo2010 · 26-10-2010 07:46PM

I'll probably get killed for this post, particularly as it is my first post. By way of background I am an Irish male living overseas since 2002. In many respects my comments here are as an outsider...

To my mind Irish people themselves brought on the difficulties the country is now experiencing. Irish people became money mad, greedy... The Irish who have not had any previous experience of wealth went bezerk and spent everything they earned...

One of the reasons I left the country in 2002 was because I felt that I "had missed the boat". By 2002 property prices were gone through the roof, and yet here I was starting out my career in a well paying job in a major profession unable to afford a house. This was absurd to me. Here I was in the upper 5% of earners and unable to buy anything. My mates were going halves to buy ****e apartments with thin plasterboard walls for 200,000 Euro and yet the previous generation of Irish were seeing their "huge" 1980s townhouses double and triple in value making them rich compared to the emerging professionals of the late 1990s... I saw no future. The prices just kept rising and rising and the greed got worse. I can still remember dumb property agents signing the praises of crap 2 bed Zoe developments apartment in Dublin 7 renting for EUR1800 a month and how the livingroom had amazing modern features such as a "telephone socket" and the kitchen had all mod cons including a microwave... FFS!! These idiots combined with loose lending criteria and a frightened marketplace fueled the hockey stick growth curve in property prices...

I can remember sharing an apartment with a young mortgage broker working for a bank in Dublin... she told me how she would judge how much to give mortgage seeking couples who came to her looking for money. 100% mortgages all the go, and if the person had a college degree and good job she effectively said someone on EUR40,000 could be given a mortgage 10 times that....

I didnt buy into the rhetoric. Dont get me wrong, I didnt know that the future would turn out the way it did, but I knew that things were wrong. I went against the tidal waves of the returning Irish from the US, UK and Australia, and I moved to Singapore and then back to Europe (Switzerland)... Now I"m far far better off than my peers at home and whilst I'd like to come back some day, I fear that Ireland is in for a very long rough ride and whilst Irish people caused this problem themselves, I dont know how it can be fixed.

Latchy · 26-10-2010 08:05PM

A friend of mine in England who worked for a well known Irish company during the boom years saw the writing on the wall and moved back to uk when she realised it would be cheaper and economical for her to put a deposit down on a house in Leeds rather then the rent her and two others were paying on their apartment in Pembroke Square Dublin . She jumped ship about 3 years ago, just before the belly up .

What is the root cause of our present difficulties?

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