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Recession predictions

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  • Registered Users Posts: 243 ✭✭LasersGoPewPew


    Geuze wrote: »
    By that I mean, create the conditions to allow the supply-side to increase.

    Specifically, I mean that at any selling price €x today, the market will supply 20,000 houses, then change the conditions, so that costs fall, so that at the same price €x, the market will supply 40,000 houses.


    Specifically, change the supply conditions, so that there is much more supply at any and all prices.


    Can you explain what you mean by 'supply conditions'? Are you proposing to change the minimum BER requirements?


  • Registered Users Posts: 12,993 ✭✭✭✭Geuze


    Can you explain what you mean by 'supply conditions'? Are you proposing to change the minimum BER requirements?

    No.

    Reduce site costs.

    Reduce finance costs.

    Reduce developer margins.

    Boost productivity / scale.


  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    Geuze wrote:
    I do not want the State to boost the demand-side of the market.

    ....and this is what keeps happening, particularly in relation to the increase in supply of money to the situation, primarily credit, we have to stop these cycles, we 're slowly recreating the pre 08 conditions again, we have to push more towards a primarily state funded model, but primarily private sector built


  • Registered Users Posts: 4,457 ✭✭✭An Ri rua


    Well worth a 10 minute watch. Rare for a parliamentarian to make so much sense and have the wide-angle lens fitted.

    https://twitter.com/PierrePoilievre/status/1385171529743310851?s=19


  • Registered Users Posts: 2,000 ✭✭✭Hubertj


    An Ri rua wrote: »
    Well worth a 10 minute watch. Rare for a parliamentarian to make so much sense and have the wide-angle lens fitted.

    https://twitter.com/PierrePoilievre/status/1385171529743310851?s=19

    38% increase in house prices since December 2019? Ouch.


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  • Registered Users Posts: 3,377 ✭✭✭NSAman


    An Ri rua wrote: »
    Well worth a 10 minute watch. Rare for a parliamentarian to make so much sense and have the wide-angle lens fitted.

    https://twitter.com/PierrePoilievre/status/1385171529743310851?s=19
    Unusual to see a politician speak sense and clearly explain implications without being interrupted.

    Everything he says is correct. Prices where I am are skyrocketing. Housing being bought sight-unseen. Prices have almost doubled here. Rents are surging. The price of lumber is crazy as are gas prices.

    Shopping which normally would cost $120 a week is $200 a week now at least.

    Inflation is here and unless interest rates rise, cash money is essentially the worst thing to hold either in cash or savings.


  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    Asset prices have been largely rising due to rising amounts of private debt, which is created by the private sector, in the form of credit, this is what occurred during our previous credit fuelled building boom, I.e. It was caused by the private sector money supply. Most Western nations have followed the same approach, which surprise surprise, the same results! Private debt is in fact the most dangerous of the two, governments can in fact increase taxes to pull the money back out, and use it to pay down public debt, always baring in mind, paying off debt is in fact the destruction of money itself


  • Registered Users Posts: 2,314 ✭✭✭KyussB


    Not going to watch a random 10 minute long video, but one thing he's right about is that MMT certainly isn't new - nearly all of its insights have been known for almost a century - it's just taken that long for it to finally become mainstream macroeconomics, displacing ideas that are centuries out of date, yet have remained dominant.

    Asset Price Inflation does not equal Inflation in general, though. MMT economists do not advocate giving finance and the wealthy massive amounts of QE printed money (that is driving this asset price inflation), either - that is not MMT policy.

    The macroeconomic effects of QE and ZIRP have forced economists and politicians to acknowledge MMT, but it isn't MMT policy. Conservatives like the politician linked, will do everything they can to prevent actual MMT policy - because their politics are based on small-government conservatism - and MMT is the biggest threat to that since Keyne's.


  • Posts: 0 [Deleted User]


    Will inflation will not kill wealth of richest people in world ? And them assets ? I am pretty sure that richest people of the world who control situation are against inflation !
    When you have 100 billions and one day they worth nothing what about that ?
    You can invest to property which will lose value because inflation
    Now about our family spending and inflation
    We was thinking buy new car but price went up so we decided buy used one
    The government lost VAT and VRT tax
    We was making about 25K km per year traveling around country and spending money in other towns now we make about 5K per year
    We not buy new tyres every year and not make service of the car every year
    Even when restrictions will be lifted we will not back on road because we saving money for property which price are rising but our wages not
    I will not back to the pub
    Before I was getting sandwiches from shop now I making them at home
    Many,many things changed.The bigger the price the less we try to spend
    Who wining ? Nobody
    Bring prices up and we will spend less because our wages not growing.
    Well the Central banks will bring rates up
    What gonna change ? People will spend less trying saving money for paying mortgage


  • Registered Users Posts: 3,377 ✭✭✭NSAman


    Will inflation will not kill wealth of richest people in world ? And them assets ? I am pretty sure that richest people of the world who control situation are against inflation !
    When you have 100 billions and one day they worth nothing what about that ?
    You can invest to property which will lose value because inflation
    Now about our family spending and inflation
    We was thinking buy new car but price went up so we decided buy used one
    The government lost VAT and VRT tax
    We was making about 25K km per year traveling around country and spending money in other towns now we make about 5K per year
    We not buy new tyres every year and not make service of the car every year
    Even when restrictions will be lifted we will not back on road because we saving money for property which rice are rising but our wages not
    I will not back to the pub
    Before I was getting sandwiches from shop now I making them at home
    Many,many things changed.The bigger the price the less we try to spend
    Who wining ? Nobody
    Bring prices up and we will spend less because our wages not growing.
    Well the Central banks will bring rates up
    What gonna change ? People will spend less trying saving money for paying mortgage

    Those with money have it invested. A billionaire will rarely have a billion in cash sitting in some bank. They invest it in different things to off-set inflation. Stocks currently are at record prices, Bitcoin (some love it some hate it) has seen its price skyrocket fall and skyrocket again as to some it is seen as some safe haven. Gold silver will all rise if inflation starts. Property is seen as a way to hoard wealth and create income.

    They will use debt as the answer to weakening currency and inflation.

    The problem comes if old reliables of wealth do not rise in the way people expect them to.

    Those that inflation hurts most are the middle and low income people. They have little investments, wages do not keep up with inflation, everything becomes more expensive and their wages don’t rise.


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  • Registered Users Posts: 4,332 ✭✭✭Arthur Daley


    KyussB wrote: »
    Asset Price Inflation does not equal Inflation in general, though.

    There will be a relationship between the value of an asset and the income it earns. In simple terms high house prices, you can expect high rents. High share prices they will demand higher dividends. This is a clear well established link. Based on experience I wouldn't be expecting 'this time its different'


  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    There will be a relationship between the value of an asset and the income it earns. In simple terms high house prices, you can expect high rents. High share prices they will demand higher dividends. This is a clear well established link. Based on experience I wouldn't be expecting 'this time its different'

    again, most inflation has been occurring in asset markets due to the private sector money supply, i.e. credit. you can clearly see this in this snap shot of our debts from the previous boom bust cycle


  • Posts: 0 [Deleted User]


    The system is simple
    The less buyers come to the shop the bigger the prices of the shoes
    For example in my shop every month was coming 100 buyers which was creating 10K income
    5K went to shop rent 2 K to buy another shop and 3 K to wages
    Now only 60 buyers coming to my shop and I have bring prices up because my expenses are the same but income lower
    That how is economy work and newly printed money has nothing to do with mu business plan
    I will bring shoes price up when I will buy Porsche for my self
    And the more I will bring price up the more VAT and income tax government will collect even if there will be only 20 buyers !
    That how government calculate statistic income to budget :)
    But then shoes factory closing because they could only sell 60 pairs of shoes and can not pay wages and loans :)
    Well they can bring prices up but then I will bring my as well
    This has nothing to do with freshly printed money this has something to do with less amount of buyers coming to my shop :)


  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    The system is simple
    The less buyers come to the shop the bigger the prices of the shoes
    For example in my shop every month was coming 100 buyers which was creating 10K income
    5K went to shop rent 2 K to buy another shop and 3 K to wages
    Now only 60 buyers coming to my shop and I have bring prices up because my expenses are the same but income lower
    That how is economy work and newly printed money has nothing to do with mu business plan
    I will bring shoes price up when I will buy Porsche for my self
    And the more I will bring price up the more VAT and income tax government will collect even if there will be only 20 buyers !
    That how government calculate statistic income to budget :)
    But then shoes factory closing because they could only sell 60 pairs of shoes and can not pay wages and loans :)
    Well they can bring prices up but then I will bring my as well
    This has nothing to do with freshly printed money this has something to do with less amount of buyers coming to my shop :)

    ...and this is why macroeconomics has been consistently failing, as its based on microeconomics thinking, macroeconomics simply does not work this way, its far more complex, hence why its termed a 'complex dynamic system'


  • Registered Users Posts: 2,314 ✭✭✭KyussB


    Seems that several posters mix up very different things and call it 'inflation' - and that when explaining that 'x' is different to general inflation, that is ignored - and things move back to inflation scaremongering.

    Got to be careful with that, because if you respond to it you're giving a stage to keep repeating the same stuff over and over - even when it is completely free of any intelligible content.

    As for how inflation actually looks right now: As long as economies are below maximum-GDP/Full-Output (i.e. Full Employment), then there is room to grow the economy more without significant inflation. We're not facing a shortage of any critical resource that would prevent such growth, and we're well below Full-Output/Employment - so we've got quite a long way to go before inflation is a concern.

    If we want to deal with asset-price inflation for assets that have a real negative effect on our lives (nothing to do with general inflation...), then this is mostly about accommodation - which it has been obvious is a supply problem - which can only be solved by constructing a large amount of accommodation, and ensuring it ends up in the hands of people intending to live in the accommodation.

    Private markets have consistently failed to do this over a decade, now - meaning that governments have to take up the slack and build in large amounts - and this is a perfect time to do that, as a Job Guarantee focused on building accommodation (among other things) can resolve that within half a decade.


  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    KyussB wrote: »
    Seems that several posters mix up very different things and call it 'inflation' - and that when explaining that 'x' is different to general inflation, that is ignored - and things move back to inflation scaremongering.

    Got to be careful with that, because if you respond to it you're giving a stage to keep repeating the same stuff over and over - even when it is completely free of any intelligible content.

    As for how inflation actually looks right now: As long as economies are below maximum-GDP/Full-Output (i.e. Full Employment), then there is room to grow the economy more without significant inflation. We're not facing a shortage of any critical resource that would prevent such growth, and we're well below Full-Output/Employment - so we've got quite a long way to go before inflation is a concern.

    If we want to deal with asset-price inflation for assets that have a real negative effect on our lives (nothing to do with general inflation...), then this is mostly about accommodation - which it has been obvious is a supply problem - which can only be solved by constructing a large amount of accommodation, and ensuring it ends up in the hands of people intending to live in the accommodation.

    Private markets have consistently failed to do this over a decade, now - meaning that governments have to take up the slack and build in large amounts - and this is a perfect time to do that, as a Job Guarantee focused on building accommodation (among other things) can resolve that within half a decade.

    all true, but we re still ignoring the money supply issue, if we continue with primarily credit fueled building, we re still gonna have a serious rising price problem, which is happening


  • Registered Users Posts: 861 ✭✭✭Zenify


    KyussB wrote: »
    As for how inflation actually looks right now: As long as economies are below maximum-GDP/Full-Output (i.e. Full Employment), then there is room to grow the economy more without significant inflation. We're not facing a shortage of any critical resource that would prevent such growth, and we're well below Full-Output/Employment - so we've got quite a long way to go before inflation is a concern.

    Asset inflation is somewhat linked to general inflation. I know lots of European IT professionals refuse to work in Ireland due to the high costs of living here. Poland seems to be at the top of the list, earn way less but live far better. They say wages here would have to double to match their standard of living... lots of recruiters are upping wages to make up for this.

    Inflation is here! You would be silly if you can't see it! Construction costs up, shipping costs way up, lots of extra costs for businesses due to covid and all upping prices.

    Anyone who is an inflation denier right now needs to take their head out of the sand.

    https://www.google.com/amp/s/www.irishtimes.com/business/construction/timber-prices-rise-5-fuelling-inflation-in-construction-costs-1.4527427%3fmode=amp


    https://www.google.com/amp/s/www.irishtimes.com/business/manufacturing/tripling-of-china-europe-shipping-costs-threatens-goods-supply-1.4462200%3fmode=amp


  • Registered Users Posts: 2,314 ✭✭✭KyussB


    Wanderer78 wrote: »
    all true, but we re still ignoring the money supply issue, if we continue with primarily credit fueled building, we re still gonna have a serious rising price problem, which is happening
    For the most part, as long as central banks keep the 3.5x income cap on lending, this should be fine - household debt has been dropping here in Ireland, and I think Corporate Debt is the bigger portion of Private Debt, now.


  • Posts: 0 [Deleted User]


    Wanderer78 wrote: »
    ...and this is why macroeconomics has been consistently failing, as its based on microeconomics thinking, macroeconomics simply does not work this way, its far more complex, hence why its termed a 'complex dynamic system'
    Nothing works in this days mate because whole system collapsed.


  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    KyussB wrote:
    For the most part, as long as central banks keep the 3.5x income cap on lending, this should be fine - household debt has been dropping here in Ireland, and I think Corporate Debt is the bigger portion of Private Debt, now.

    There are limitations to these restrictions, some people are starting to move from more expensive regions to less expensive, bringing their money and access to money (credit rating) with them, there are also still international interests in our property markets, speculation etc, and with deposits significantly rising during covid, all still causing prices to rise in some regions, this situation has the potential to become much worse.

    Corporate debt is certainly the bigger of the two at the moment, but we re trapped, for the reasons outlined, wage inflation is relatively low in comparison, this is a disaster, the bulk of our property debts must sit on the public balance sheet going forward, we have to break this cycle. Many younger generations are litterily stuck, unable to move out of the family home or out of the rental sector, everything is starting to back up, this is having serious implications for us all, its causing serious social mobility problems


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  • Registered Users Posts: 2,314 ✭✭✭KyussB


    The good news at least, is that while the state of the property market is complex, it's a simple one to fix: Build enough houses/accommodation, expand public transport to decentralize away from city center's, and put restrictions on foreign ownership of residential property.

    All of this perfectly achievable by the government, especially if implementing a Job Guarantee with building accommodation being one of its initial goals.

    We have the funding, we have the labour, we have the training capacity, we have the physical resources and industry needed - the private sector won't do it, so the government has to.


  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    KyussB wrote: »
    The good news at least, is that while the state of the property market is complex, it's a simple one to fix: Build enough houses/accommodation, expand public transport to decentralize away from city center's, and put restrictions on foreign ownership of residential property.

    All of this perfectly achievable by the government, especially if implementing a Job Guarantee with building accommodation being one of its initial goals.

    We have the funding, we have the labour, we have the training capacity, we have the physical resources and industry needed - the private sector won't do it, so the government has to.

    i completely understand where you re coming from, even though i dont completely agree with you, but we must realise exactly where we are right now, we must admit our reality. at the moment, virtually none of this is currently on the table, we re currently defaulting to the norm, and its catastrophically failing, this will more than likely end very badly for us all. i appreciate your opinions and knowledge on these subject matters, it far exceeds mine, but we re really not in a great place right now, our government and society at large, has little or no knowledge of what you speak of, it just knows the norm, ive no idea how we change this


  • Banned (with Prison Access) Posts: 452 ✭✭Sharpyshoot


    Keep building council houses for the lads that don’t want to work.


  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    Keep building council houses for the lads that don’t want to work.

    ...and then you have people coming along with this sh1t also, the majority of citizens actually work, a large proportion of them, particularly younger generations, are currently unable to meet their property needs. its not just social housing thats desperately need, but all forms of housing and accommodation. you need to look into the root causes of long term unemployment, its far from your prejudice views


  • Banned (with Prison Access) Posts: 452 ✭✭Sharpyshoot


    Don’t mind the fancy talk with calling a council house a social house.


  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    Don’t mind the fancy talk with calling a council house a social house.

    what are you even talking about now, we clearly need a substantial increase in all types of housing and accommodation and as others have said, its clearly obvious, the private sector cant or simply wont do it, so...........


  • Registered Users Posts: 1,476 ✭✭✭coolshannagh28


    KyussB wrote: »
    The good news at least, is that while the state of the property market is complex, it's a simple one to fix: Build enough houses/accommodation, expand public transport to decentralize away from city center's, and put restrictions on foreign ownership of residential property.

    All of this perfectly achievable by the government, especially if implementing a Job Guarantee with building accommodation being one of its initial goals.

    We have the funding, we have the labour, we have the training capacity, we have the physical resources and industry needed - the private sector won't do it, so the government has to.

    You correctly point out that foreign ownership is one of our biggest problems; Ireland is a tiny market being monopolised by institutions mainly US based interestingly at the behest of and incentivised by our government.


  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    You correctly point out that foreign ownership is one of our biggest problems; Ireland is a tiny market being monopolised by institutions mainly US based interestingly at the behest of and incentivised by our government.

    Do we have absolute certainty that most of these institutions are American, a major Saudi investor is just entering my local markets, but it looks like backed by American money?


  • Registered Users Posts: 1,476 ✭✭✭coolshannagh28


    Wanderer78 wrote: »
    Do we have absolute certainty that most of these institutions are American, a major Saudi investor is just entering my local markets, but it looks like backed by American money?

    It was US money that was sought out first and incentivised ,Im sure others are getting on the bandwagon but the big footprint of US MNCs in Ireland and their knowledge of the market lends itself to mainly US investment.


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  • Registered Users Posts: 12,993 ✭✭✭✭Geuze


    KyussB wrote: »
    We have the funding, we have the labour, we have the training capacity, we have the physical resources and industry needed - the private sector won't do it, so the government has to.


    We have the finance, yes, but do we have enough skilled construction labour to build 50,000 houses per annum?

    I hope we do, but I don't think so.


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