The Economy : Any one else starting to get very worried ?

lawlolawl wrote: »

There were far fewer repossessions of houses than their should have been, only a handful really and mostly by sub-prime lenders.

And banks offered to restructure payments for thousands of people who ran into difficulty.

Restructuring isn't a big bail out and it wasn't hugely widespread either. The bank still get their money and in most cases it was just a term extension which makes sense. Why would a bank repossess a house and sell it for circa 50% of the outstanding mortgage when the owner is willing to pay the full amount over an extended term?

lawlolawl

smash wrote: »

Were mortgage holders bailed out? I must have missed that one.

There were far fewer repossessions of houses than there should have been, only a handful really and mostly by sub-prime lenders.

And banks offered to restructure payments for thousands of people who ran into difficulty.

cowboyBuilder

I don't live in Ireland anymore, but I'm not surprised, I always knew there would be another economic boom and another crash.

Tsipras

kneemos wrote: »

The same self defeatest crap every time things look vaguely better.Some people ain't happy unless they're wallowing in misery.

Is that you Bertie?

maudgonner wrote: »

The standard for affordability of a mortgage should be much more stringent than what you can afford in rent though.

It absolutely needs to include a reasonable amount of stress testing. It should take into account that circumstances change as you get older, maybe have a family - the percentage of your income that is available to service a mortgage can change dramatically. And there are significant costs that come with being a home owner that don't apply to renters.

While the gap at the moment may be larger than makes sense, that's not always going to be the case. I'd much prefer that banks were cautious now, rather than end up bailing people out again in 10 years time.

Were mortgage holders bailed out? I must have missed that one.

KomradeBishop wrote: »

Yet deflation drags everything down over time - that's one of the reasons why economists regard it as a dire state for an economy to be in long-term - and long-term deflation is where we're headed, absent a huge EU-backed boost in fiscal spending.

Yes, thank you for the macro-economic lecture - but if you read the exchange in full you'd see I was referring to the potential impact a relatively large building project might have on the local economy of modest provincial town :rolleyes:

KomradeBishop

Jawgap wrote: »

That doesn't mean there aren't areas of the country where some goods and services are increasing in price - not everything in the 'basket' is in declining in price

Yet deflation drags everything down over time - that's one of the reasons why economists regard it as a dire state for an economy to be in long-term - and long-term deflation is where we're headed, absent a huge EU-backed boost in fiscal spending.

KomradeBishop wrote: »

We're in deflation right now - the opposite of inflation.

That doesn't mean there aren't areas of the country where some goods and services are increasing in price - not everything in the 'basket' is in declining in price

maudgonner

Captain Chaos wrote: »

Rents in Dublin are now a good bit higher than monthly mortgage repayments yet the banks are telling the same people they cannot afford to take out a mortgage.

It's a joke.

The standard for affordability of a mortgage should be much more stringent than what you can afford in rent though.

It absolutely needs to include a reasonable amount of stress testing. It should take into account that circumstances change as you get older, maybe have a family - the percentage of your income that is available to service a mortgage can change dramatically. And there are significant costs that come with being a home owner that don't apply to renters.

While the gap at the moment may be larger than makes sense, that's not always going to be the case. I'd much prefer that banks were cautious now, rather than end up bailing people out again in 10 years time.

_Brian

Captain Chaos wrote: »

Rents in Dublin are now a good bit higher than monthly mortgage repayments yet the banks are telling the same people they cannot afford to take out a mortgage.

It's a joke.

I'd imagine alot of that has to do with the banks true outlook for our financial stability. Yes you can afford the mortgage now but maybe another downturn just around the corner and the bank are protecting themselves..

_Brian

I think the new government are actually in for a tough ride.. As of the news this morning exchequer funding is running a meager €500m ahead of expected tax take..

However, pay restoration is looming and this could be a problem. Haddington road left 2016 as the year when pay restoration would start, this will see the public sector pay bills rise by 10%+. Scenes like what we're seeing with the Luas drivers where they are looking for 25%+ pay rises will be more common. The unions are flexing their power, they know that the ordinary Union member is feeling down and they will capatilise on all the talk of extra money in the government bank account.

1,000's of new guards to be taken on (badly needed)
Guards, nurses, teachers all looking for the end of the two tier pay system.
Luas, Irish Bus, Irish Rail all expected to achieve substantial pay increases.

A deal has been struck to eliminate the USC, thats ~€4bln out of the tax take straight away. More increases in social welfare likely, pensions, childrens allowances all due to increase. Water charges, which were a way of widening our tax take to get security into government funding has been abolished.

The US has been talking about stopping the multinationals using Ireland as a tax haven. I could see a new president Trump going out of his way to punish American companies for setting up here and so some would leave and fewer would come. And its why they are here, when you see companies like Intel Ireland actually registered business is in the Cayman Islands that is only for a tax dodge.

The recovery we have seen to date is built on two fickle things, exports based on a weak euro - any wobble on world markets would collapse exports instantly. Multinationals wanting to be here - wouldn't take much for the American government to construct a scenario where being in Ireland is much less favorable than it currently is, something they have promised to do during their election speeches.

So the seeds have already been set, the country plans to spend more and more and take in less and less while the revenue streams the government is relying on are far from secure.

Captain Chaos

lawlolawl wrote: »

That just means that they can afford their rent and fair play to them.

The mortgage they are getting will just have to fit the size of whatever they can save of what's left.

Rents in Dublin are now a good bit higher than monthly mortgage repayments yet the banks are telling the same people they cannot afford to take out a mortgage.

It's a joke.

lawlolawl

smash wrote: »

That's nonsense. How can they not afford where they're living if they can quite easily pay €1,400 or €1,500 a month?

That just means that they can afford their rent and fair play to them.

The mortgage they are getting will just have to fit the size of whatever they can save of what's left.

KomradeBishop

Jawgap wrote: »

Yes, I know - but here's the thing - they're paying jobs whether the money is coming from foreign banks or the government revenue and that's money going into the local community, impacting local money supply and local prices :rolleyes:

We're in deflation right now - the opposite of inflation.

Maximus Alexander

lawlolawl wrote: »

This was actually a fairly good move by the banks even if it is really unpopular.

It goes some way to making sure that people can actually somewhat *GASP* :eek: afford the property that they are buying.

As a first time buyer, I agree. It's much harder for us to save what we need for a house we actually want, yet I hope they don't row back on this. It's a good, sensible measure.

[Deleted User]

The only problem is that the central bank have stated publicly that the new mortgage rules will most likely be permanent.

I don't see it at all in Ireland in my opinion people are not spending on credit, there really is more money around based on employment its not a construction based boom.

Although they are at the 100% carry on in the UK.

https://www.theguardian.com/business/2016/may/04/barclays-offers-0-percent-deposit-mortgage-to-home-buyers

[Deleted User]

JustTheOne wrote: »

There is a common theme in this country.

FF boom the economy then bust it.
FG come along fix it.
FF get back in and we're off again.

FG take the slack for doing the responsible thing and taking the nasty measures needed.

This is the myth alright, largely because Fine Gael has not been in power for anything like the time Fianna Fáil has to show its corruption. Take the last government. Can somebody remind us how Fine Gael established Irish Water? The army of private consultants they hired and the couple of thousand superfluous employees making Irish Water a massive statement in crony capitalism, jobs for the boys and abject inefficiency, with the genius responsible, Phil Hogan, promoted by being given a €300,000 plus salary as EU commissioner.

This is before Fine Gael bottled it by refusing to reform the legal or accountancy systems (with their strong financial support for Fine Gael), the very two self-regulating professions which have conspired to deny us competition/lower prices since time immemorial. To think that the same accountancy firms which signed off on fraudulent accounts for the financial institutions are still in receipt of lucrative state contracts is galling. The big 10 law and accountancy firms, the very firms that both advise private firms on tax avoidance and advise state bodies ("Chinese walls" how are you!), are untouched by any genuine reform. Fine Gael is very selective indeed in the groups it decides to "reform".

Mr. teddywinkles wrote: »

Yea but there government funded jobs not privately funded. Means nothing towards your point saying things are boomeir

Yes, I know - but here's the thing - they're paying jobs whether the money is coming from foreign banks or the government revenue and that's money going into the local community, impacting local money supply and local prices :rolleyes:

Timberrrrrrrr

Jawgap wrote: »

No, I mean tower cranes over Carlow and more tower cranes over Dublin

I used to operate tower cranes back in the day, was bored one day so decided to do a full circle and count how many I could see.

142 Tower cranes
28 mobile cranes
14 self erect tower cranes.

I was city center based (smithfield) and didn't include ones in the suburbs.

lawlolawl wrote: »

They clearly can't afford where they are living and need to move and they shouldn't be looking at a 300K mortgage in that case either.

That's nonsense. How can they not afford where they're living if they can quite easily pay €1,400 or €1,500 a month?

Jawgap wrote: »

No, I mean tower cranes over Carlow and more tower cranes over Dublin

Yea but there government funded jobs not privately funded. Means nothing towards your point saying things are boomeir

mahoganygas

The Rape of Lucretia wrote: »

All the headlines starting to look very good :

- exchequer returns up and ahead of forecast
- unemployment dropping each quarter
- unions looking for double digit pay increases
- Ireland the fastest growing economy in Europe
- construction industry rising steadily
- Iseq index on a steady rise since 2011
- widespread wage increases beyond inflation
- people cannot afford property and agitation for govt subsidies to help them

Oh ****. Where have we seen these before ?
Oh, thats right. Its déjà vu all over again repeatedly for a second time.

Anyone else starting to get nervous about all these 'positive' economic notices ?

If all of those economic indicators were negative instead of positive would you still be nervous?

Not directed at you, but Ireland is a nation of begrudgers. We put ourselves down when we do something right.

Also these are mostly domestic macroeconomic indicators. Ireland is a small open economy. I'd be much more worried about the health of UK/US/EU economies. The single biggest factor we should be nervous about is that large question mark hanging over the Brexit referendum. Everything else you have mentioned goes out the window if Brexit happens.

Phoebas

The Rape of Lucretia wrote: »

All the headlines starting to look very good :

- exchequer returns up and ahead of forecast
- unemployment dropping each quarter
- unions looking for double digit pay increases
- Ireland the fastest growing economy in Europe
- construction industry rising steadily
- Iseq index on a steady rise since 2011
- widespread wage increases beyond inflation
- people cannot afford property and agitation for govt subsidies to help them

Oh ****. Where have we seen these before ?
Oh, thats right. Its déjà vu all over again repeatedly for a second time.

Anyone else starting to get nervous about all these 'positive' economic notices ?

There's not necessarily a problem with any of the above.

The problem happens when we start to think that all of the economic improvements will go on forever, and we increase current spending on that basis.

Unfortunately, with a weak government, that's exactly what will happen.

lawlolawl

smash wrote: »

It's a catch 22. How can someone afford to save say €60,000 when they're paying €1,400/€1,500 a month in rent? The fact that they continue to pay this level of rent is indication that they could afford to pay an even cheaper mortgage.

They clearly can't afford where they are living and need to move and they shouldn't be looking at a 300K mortgage in that case either.

lawlolawl wrote: »

This was actually a fairly good move by the banks even if it is really unpopular.

It goes some way to making sure that people can actually somewhat *GASP* :eek: afford the property that they are buying.

It's a catch 22. How can someone afford to save say €60,000 when they're paying €1,400/€1,500 a month in rent? The fact that they continue to pay this level of rent is indication that they could afford to pay an even cheaper mortgage.

valoren wrote: »

A bubble as per Hyman P Minsky.

Step 1 - Disturbance, something new happens like the Internet or in our case The
Tiger
Step 2. - Prices start to rise
Step 3 - Mortgages and Credit becomes cheap and easy to get, adding petrol to the
flames. Speculators arrive in droves flipping properties and making a bundle using
cheap bank cash.
Step 4 - The market overtrades leading to shortages so prices accelerate and easy
profits are made. That attracts new types of players, outsiders, inexperienced,
greedy, foolish and desperate to get their share.
Step 5 - It becomes euphoric. You can’t lose. It’s a new world. The wise, cautioning
fellow citizens are laughed at by the charlatans talking up the market. They’re only
grumps, down-in-the-mouths, pessimists. Eventually the charlatans adopt the soft
landing theory, a soft deceleration in prices to calm the nerves. A culture of denial
takes over even though everyone knows prices can’t keep rising.
Step 6 - Quietly experienced insiders start to tip toe out of the market. They
remember the old world, how things were and see the madness for what it is.
Insider profit taking is the end signal.
Step 7 - Slower insiders begin to panic. The panic spreads to outsiders. Everybody
wants to sell but there’s no buyers. Buyers read a collapsing market and hold off.
That pushes prices even lower. The banks pull the plug. Credit dries up, prices
keep tumbling, there is no end in sight. Huge losses accumulate.

That the above will never happen here again is naive.

Source - http://www.eddiehobbs.com/content/30%20Things%20to%20do%20with%20your%20SSIA%20Summer%202006.pdf

Dont forget everyone blames banks, developers, there local coffee shop for charging 10euro a coffee and everyone else but never themselves

Mr. teddywinkles wrote: »

Carlow? Ya mean the public buildings such as the college. Theres no private projects on going.

No, I mean tower cranes over Carlow and more tower cranes over Dublin

namloc1980

The weekend shopping trips to New York are back on the agenda. Let the good times roll!

Jawgap wrote: »

I think the only people who need to be worried are those funding their lifestyles on credit.....

.....but the signs of the boom getting boomier are all there - lots of builders with new vans / jeeps, bulging property supplements, tower cranes in Carlow, people changing their car every year......

.....all we need now is billboards advertising flats by using strawberries and a girl draped across high end kitchen fittings and some Cork langer on d'telly pushing property on a windswept Atlantic island as a great investment

Carlow? Ya mean the public buildings such as the college. Theres no private projects on going.