The Irish Economy - Worrying Signs?

Pa ElGrande · 16-04-2006 10:44pm

lomb wrote:

I think not! luckily the old man is co signing the loan so that adds a bit of credibility to the equation. they think all dentists are rouges:D

i think all the optimists are partially right and the pessimists are. im a firm believer in true productivity. and i know ireland apart from its low corporation tax is falling behind every day on competitivity.

if it isnt peak oil it will probably be globalisation thats the eventual wake up call.

i reakon theres probably 3-5 years left in this boom with prices rising another 50-60% for starter semis homes in dublin, 40% for apartments, and 40% for trade up houses around dublin. after that it probably will either collapse or whats more likely stop for many years and inflation will slowly erode property prices before another cycle.

everyone who knows property knows its cyclical and we are in the rising part of the cycle, how far it has to go no one knows. but its going to be a bumpy ride:D

Personally I'm calling this year, 2006 as the top of the housing market.

The problem with a mania (like the present house price bubble) is that it defies rational analysis, that's why there is such a raft of conflicting information out there, even AIB's chief economist, John Beggs is stumped.

Houses: What happens next?
http://www.sbpost.ie/post/pages/p/story.aspx-qqqt=NEWS%20FEATURES-qqqs=news-qqqid=13473-qqqx=1.asp

Comment: Frank Fitzgibbon: Bertie knows everything
http://www.timesonline.co.uk/article/0,,2091-2136210,00.html

lomb · 16-04-2006 10:58pm

Pa ElGrande wrote:

Personally I'm calling this year, 2006 as the top of the housing market.

correct no one knows whats going to happen.
well see about 06 being the peak, il bring this thread back up next year and i think odds are that the boom will be booming next year also. interest rates arent rising enough to deflate it. and even if they rise the banks are coming out with more innovative products to reduce monthly payments like 40 year mortgages or interest only or worse interest roll up. then u could see another 5-10 years of booming before an almighty crash to earth. the problem is its in everyones favour for property to rise. in the buyers favour as he thinks it will be worth more next year so it doesnt matter what it costs, the sellers as he thinks hes got a very very strong price the likes which have never been seen before, the estate agents who trump it up, the politicians and their votes, the government with stamp, vat and employment taxes on construction workers, the media as they get ad revenue from developers, the banks whos profits are spiralling, the planners as they keep granting permission for more and no ones objecting as everyone thinks MORE MORE MORE, the land developers who are doubling their money on borrowed money thats heavily leveraged, the pensioner whos interested in equity release, the construction workers working away on crazy incomes , the building merchants, and concrete companies minting it, absolutely everyone.

i personally couldnt care if it continues or it doesnt and wheter it slows or crashes 50%, it doesnt particularly effect my decisons as the property i want at the moment is for a lifelong interest and not short term, and my income is not derived from construction or any part of it(thank god), but i find it very addictive to look at the various scenarios and how it will play out:D

to sum it up though i still think GOOD property is a GREAT LONG TERM investment with the proviso U CAN AFFORD THE PAYMENTS stress tested.

Sponge Bob · 17-04-2006 12:45am

lomb wrote:

correct no one knows whats going to happen.
well see about 06 being the peak, il bring this thread back up next year and i think odds are that the boom will be booming next year also. interest rates arent rising enough to deflate it. and even if they rise the banks are coming out with more innovative products to reduce monthly payments like 40 year mortgages or interest only or worse interest roll up. then u could see another 5-10 years of booming before an almighty crash to earth.

nahh , 2007 will be the peak I'd say, 50% of all SSIAs come in in April 2007 , we will not have to wait beyond 2008 for the slump/crash/unwind whetever.

lomb · 17-04-2006 9:28am

even if its 2007 or 2008 then prices will have risen another 35 or more percent by that time, so even if theres a correction of 15 % u will be quids in. also residential interest rates can be fixed today for 10 years for 4.7% now that isnt bad when u consider boi were quoting me an opening of 4.7% for a commercial mortgage(they price these differently as a percent over euribor).

personally this boom has plenty more to go, and the moral of the story is buy buy buy:D

silverharp · 17-04-2006 9:47am

Well done for the people that mentioned "peak oil", I think we are headed for a perfect storm where if the demise of the US economy doesnt get you , peak oil will, any financial instruments after 2010 are going to lose alot of money, gov bonds,pension assets, high multiple shares. people who are paying more then €2m for a house in D4 are going to be sick as parrots IMHO, talk about priced to perfection

lomb · 17-04-2006 9:59am

silverharp wrote:

people who are paying more then €2m for a house in D4 are going to be sick as parrots IMHO, talk about priced to perfection

Its more than 3.5 million for a 'decent' house with parking in d4 tbh.. its 2.5 mill in d6
peak oil may or may not get anyone,even if fuel bills treble i think there is still room in the economy to accomate oil at this price WITH THE PROVISO that the government dont tax the aditional increase in fuel duty.

Pa ElGrande · 17-04-2006 11:48am

silverharp wrote:

Well done for the people that mentioned "peak oil", I think we are headed for a perfect storm where if the demise of the US economy doesnt get you , peak oil will, any financial instruments after 2010 are going to lose alot of money, gov bonds,pension assets, high multiple shares. people who are paying more then €2m for a house in D4 are going to be sick as parrots IMHO, talk about priced to perfection

I don't know if you have noticed it but since the beginning of the year costs for transport, heating and food have all risen substantially.

Peal oil argument aside the problem with oil rises is that it feeds into inflation.

Transport is dependent on oil.
Heating is dependent on oil & gas.
Food production is dependent on oil. (Fertilizers, pesticides, transport, packaging)
Clothing is dependent on oil. (synthetic fibres, cotton needs lots of pesticide.)
Manufacturing is dependent on oil (plastics, raw materials, transport)

The net effect of this is that this increases costs that are fed through to the the end user (you & me). Companies that cannot pass on the rise go out of business or cut back on employment.
The worker is also caught in a vice where wage increases are not keeping pace with inflation, due to competition from outsourcing in cheaper wage locations and availabilty of cheaper labour in this country.

Perfect storm brewing indeed.

It seems the first question couples ask the mortgage lenders today is "How much can we get?" rather than "How much can we afford?" [Richard Curran in today's Irish Independent, business section].

Interest rates rise = more income spent servicing debt.
Oil prices rise = cost of living increases.
Interest repayment + oil rising faster than wages = less spending and/or further increases in debt, fueling more unemployment and decrease in an individuals net worth.

B.T.W. - Oil exploration is a growth area right now with companies like Shell & BP crying out for people with skills. Most of the people establised in this field are over 50.

ronbyrne2005 · 17-04-2006 12:00pm

peak oil seems like a scare story to me, theres plenty of alternative energies etc,world economy could cope with 150dollar oil in the short to medium term and this price level would be good in that it would encourage the development of economically viable alterative energy sources.

Pa ElGrande · 17-04-2006 12:11pm

ronbyrne2005 wrote:

peak oil seems like a scare story to me, theres plenty of alternative energies etc,world economy could cope with 150dollar oil in the short to medium term and this price level would be good in that it would encourage the development of economically viable alterative energy sources.

High oil prices are not good right now if you are in Eritrea or Bangladesh, how many more countries would be pushed over the edge by $150 per barrel of oil?
Since when is mass starvation a good development?

Eritrea blames power cuts on supplier’s shortage of oil
http://www.sudantribune.com/article.php3?id_article=14816

BPC rationing diesel as stock plummets
http://nation.ittefaq.com/artman/publish/article_26893.shtml

One barrel of oil = 42 gallons(US) = 159 litres.

@ $70 barrel

$70.00 = $57.30 EUR (today's conversion rate $1 = €0.818526)

oil = €0.36/ltr

Today a 2 ltr bottle of ballygowan in Supervalu = €1.40

water = €0.70/ltr

lomb · 17-04-2006 12:50pm

id tend to agree, 150-200 dollar oil could be great news for the west and put the new east out of business by crippling chinese factories and their competitivity with western enterprises.
im not saying this is good news for individuals but it could be great news for the irish economy. money is a strange thing never underestimate the twists and turns the river of business will take..

lomb · 17-04-2006 12:54pm

ronbyrne2005 wrote:

would be good in that it would encourage the development of economically viable alterative energy sources.

correct i agree, it would lead to the rebuilding of nuclear factories imho, but also expansion of solar and wind power. this is what will eventually get the world off its oil addiction, extortionate prices/

silverharp · 17-04-2006 1:06pm

if we get 150-200$ oil, it will damage tourism, and owning foreign property in Europe may not look so clever, most of Ryanair's fuel hedges run out this year.
The Fed will be forced to keep raising rates, and unlike the 70's when peoples debts were small, this time around there are alot of people will variable rates and this will crush the US economy
if you hadn't noticed The US and Europe are inflating the currency at around 10% pa this is a big fraud on savers and will only accelerate if oil spikes. I invested in oil and gold 2 years ago and havn't regretted it since.

Pa ElGrande · 17-04-2006 1:38pm

silverharp wrote:

The Fed will be forced to keep raising rates, and unlike the 70's when peoples debts were small, this time around there are alot of people will variable rates and this will crush the US economy
if you hadn't noticed The US and Europe are inflating the currency at around 10% pa this is a big fraud on savers and will only accelerate if oil spikes. I invested in oil and gold 2 years ago and havn't regretted it since.

The expansion of the money supply has been one of the main reason's that asset bubbles have been popping up all over the world. In fact the American federal reserve has stopped publishing the M3 data since March 2006. (If I were a conspiracy theorist, this would be highly suspicious)

http://en.wikipedia.org/wiki/Money_supply

Pa ElGrande · 17-04-2006 1:51pm

lomb wrote:

id tend to agree, 150-200 dollar oil could be great news for the west and put the new east out of business by crippling chinese factories and their competitivity with western enterprises.
im not saying this is good news for individuals but it could be great news for the irish economy. money is a strange thing never underestimate the twists and turns the river of business will take..

Look around you at the moment and find 10 things that you use everyday that are made in Ireland, then read this article by David McWilliams.

Celtic pirates plundering credit
http://www.davidmcwilliams.ie/Articles/view.asp?CategoryID=-1&CategoryName=&ArticleID=342

It happened to the Spanish before, its happening to us now in 2006.

Sponge Bob · 17-04-2006 3:07pm

Except that his theory of credit as a commodity is fundamentally flawed .

Unlike Gold, credit can be 'created' . Its called a 'reserve ratio' in banking. If you reduce it you create instant credit . Of course if you create too much you end up hobbling the economy long term and having debt crises but who gives a **** with an election coming up in 2007 .

There is a prudent amount of credit for each economy, it generates real incomes and goods. The Irish problem is that it has all been diverted into this ridiculous housing bubble of hours by bankers who do know better but who cannot thing of a better way to lend this credit.

If I went in looking for €1m to make a good or product I would get 8-10% interest rates, if I borrow to finance the housing bubble b buying second and third homes its 4-5% so where is the incentive to produce anything in that ???

Muppetry. Avoid the housing market until after or well after the correction , after all its cheap to rent now is it not

silverharp · 17-04-2006 5:39pm

Pa ElGrande wrote:

The expansion of the money supply has been one of the main reason's that asset bubbles have been popping up all over the world.

Absolutely, the US trade deficit creates assets in foreign central banks which then have to issue local currency, hence the money expansion in Europe and Asia. Japan created vast amounts of new money in 04 to keep its currency down against the dollar.

I think what the FED is doing is trying to pop the property bubble in the US but at the same time increasing the money supply. The FED will be up to all kinds of tricks to bring commodities down, as they can't pause on rates if gold and oil are still going up.

In reality the US is probably in recession already, inflation is more like 6% and unemployment is above 10%, they use a crazy births/death model which basically doesn't count people who have been unemployed for 6 months or more. I think the next 6 mths will be interesting.

blueshirt · 17-04-2006 5:45pm

Don’t worry, not a problem, benchmarking Bertie will sort it all out. Just give the public servants (and himself, charity begins at home) another huge pay rise that us idiots in the private sector will have to pay for.

Pa ElGrande · 17-04-2006 6:45pm

blueshirt wrote:

Don’t worry, not a problem, benchmarking Bertie will sort it all out. Just give the public servants (and himself, charity begins at home) another huge pay rise that us idiots in the private sector will have to pay for.

Of course, all that borrowed money proping up the government finances, no wonder Bertie was praising the contribution of the banks to Irelands miracle economy

http://www.finfacts.com/irelandbusinessnews/publish/article_10005395.shtml

Pa ElGrande · 17-04-2006 8:53pm

The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.
William A. Ward

Looks like I'm not the only optimistic realist out there, gonna get this and have a read.

The Second Great Depression
Warren Brussee
http://www.amazon.co.uk/exec/obidos/ASIN/1591136881/qid=1145303132/sr=1-1/ref=sr_1_2_1/203-4555340-1360748

replytohere2004 · 18-04-2006 4:30am

The party will definitely be over it this proposel is implemented:

Irish Independent, 18.04.6

[FONT=Verdana, Arial]By Mike Hayes, tax partner with KPMG

EU Company Tax Plans Could Be a Catastrope for Ireland[/FONT][FONT=Arial, Verdana, Arial]
[/FONT]
AS we commemorate Easter 1916, new proposals from Brussels could have us giving up one of our key sovereign rights - the automatic right to collect tax from Irish companies. [FONT=Verdana, Arial] The European Commission would like to find some mechanism to ensure that all companies operating in the European Union pay corporation tax on a consistent basis right throughout the EU, irrespective of where these companies are deemed to be resident for tax purposes.
The intention is not to harmonise tax rates but instead to harmonise the basis for calculating taxable profits to which the national rates of tax are then applied.
This would involve harmonising all of the different elements that are used by member states to calculate a company's taxable profits.
This is an admirable concept. However, these proposals could result in profits earned by Irish companies being deemed to have arisen in other countries, with the result that they would then become subject to tax at the rate prevailing in those countries.
The somewhat benign-sounding Common Consolidated Corporate Tax Base (CCCTB for short) is best explained by means of an example.
Take an Irish company which earns profits of €20m, but where its turnover is split 75pc-25pc between Germany and the United Kingdom.
Proposals
At present, this Irish company would pay tax in Ireland of €2.5m at 12.5pc on its €20m profits. Under the CCCTB proposals, a significant part of the profits of the Irish company could be allocated to Germany and the UK, on the basis that the Irish company has some physical presence or relationship with those countries and because of the turnover generated in them.
Most of the income arising in the Irish company would be taxed at the much higher corporate rates prevailing in both of those countries.
While this is a somewhat extreme example, there is a very strong possibility that the proposals will result in the tax base being shifted away from Ireland, resulting in a significant fall-off in corporation tax yield for the Irish Exchequer. More importantly, multinationals will begin to question the rationale for locating in Ireland if the corporate tax advantages disappear under these proposals (and one of the aims of the proposals is to reduce tax competition between member states, although not with respect to tax rates).
The key advantage Ireland can offer multinationals has always been its favourable corporate tax regime (whether it was export sales relief, 10pc manufacturing tax or the 12.5pc profits tax rate). This is even truer in the current environment, where we can no longer compete on labour supply and labour costs.
You do not need a degree in Economics to work out the potentially catastrophic implications if highly mobile multinationals no longer see Ireland as their first choice for the location of profitable manufacturing operations.
At this point, it is difficult to predict where all of this will end up, but the stated desire is to reach implementation by 2008. The issues are currently being examined by an EU working group which has been asked to bring specific proposals back to the Commission.
Earlier this year, the Austrian Finance Minister pointed out that around 20 of the EU's 25 member states would agree to move forward on a proposal to create the consolidated corporate tax base on their own this year, as they could theoretically do under the new "enhanced co-operation" rules.
There is no doubt that this issue is at the forefront of the agenda of the EU Taxation Commissioner, Laszlo Kovacs.
The Internal Markets Commissioner, Charlie McCreevy, has already publicly attacked the plan, leading to a strong rebuttal from Mr Kovacs.
These proposals represent a real threat to Ireland Inc and it is important that anyone who cares about the competitiveness of Ireland understands both the potential impact of these developments and also the gathering momentum behind such proposals.
Mike Hayes is tax partner with KPMG
[/FONT]

Sponge Bob · 18-04-2006 9:51am

replytohere2004 wrote:

The European Commission would like to find some mechanism to ensure that all companies operating in the European Union pay corporation tax on a consistent basis right throughout the EU, irrespective of where these companies are deemed to be resident for tax purposes.

remember the Nice treaty and threat to use national veto by UK with full Irish backing ? . Harmonisation of taxes is way off in the future if ever .

The intention is not to harmonise tax rates but instead to harmonise the basis for calculating taxable profits to which the national rates of tax are then applied.

...which implies the prior harmonisation of accountancy standards in order that the basis calculations are carried out in the same way. I feel that harmonisation of basis could have a better future than harmonisation of rates and bands though. The payment of operations tax is alrady a principle with VAT, why not ceatain operating profits where you have a presence ?????

You may not have a presence, eg Dell, by doing it all over the phone/web and running a lossmaking support operation in Germany instead.

Even harmonisation of basis is years away , albeit not a bad idea at all .

Sponge Bob · 19-04-2006 9:25am

...at least the estate agents claim it has and they should know

http://money.cnn.com/2006/04/18/real_estate/agents_bearish_in_blogs/index.htm

It took long term 30 year fixed mortgage rates of around 6.5% in the US to engineer what appears to be the soft landing we would dearly like in Ireland. As we tend not to have fixes over 10 years there is no comparable product here.

6.5% . OUCH

ronbyrne2005 · 19-04-2006 10:16am

Sponge Bob wrote:

...at least the estate agents claim it has and they should know

http://money.cnn.com/2006/04/18/real_estate/agents_bearish_in_blogs/index.htm

It took long term 30 year fixed mortgage rates of around 6.5% in the US to engineer what appears to be the soft landing we would dearly like in Ireland. As we tend not to have fixes over 10 years there is no comparable product here.

6.5% . OUCH

most people in america take out 30 year fixed rate mortgages so even when fed rates were 1% 30 year mortgage rates were 5-6%,im sure some people switched to variable in the low rate environment but it didnt last long.

whizzbang · 19-04-2006 10:27am

ronbyrne2005 wrote:

most people in america take out 30 year fixed rate mortgages so even when fed rates were 1% 30 year mortgage rates were 5-6%,im sure some people switched to variable in the low rate environment but it didnt last long.

If only we have 30 year fixed mortgages here, that would be sweet!

J

Sponge Bob · 19-04-2006 10:28am

ronbyrne2005 wrote:

most people in america take out 30 year fixed rate mortgages so even when fed rates were 1% 30 year mortgage rates were 5-6%,

actually good point that, when I checked it seems that the rates were around 5.5% at their lowest point

http://www.freddiemac.com/pmms/pmms30.htm

so the 6.5% rate is only 1% higher .

ronbyrne2005 · 19-04-2006 12:35pm

i think the higher rates in america due to long term fixed rates have held back the price increases in america, average hous prices in america arent as expensive as here/uk,there may be localised bubbles on coasts and in some other areas but theres still plenty of good value housing in most if not all states.

Pa ElGrande · 19-04-2006 11:03pm

Two very important long term developments which will eventually impact the Irish economy. it's rare that the Saudi's admit declining yields, but it does square with what some other oil exploration companies have been saying that they can't get equipment because the Saudi's have procured it all. The other is that American multi-nationals are coming under increased scrutiny from their own government as regards tax revenue, this could be a precursor to changes in the American tax codes, if there is grounds to this, especially following on from the Microsoft situation earlier this year.

Saudi Aramco boosts drilling efforts to offset declining fields
http://www.platts.com/Oil/News/8377179.xml

Symantec's $1 billion tax bill; US IRS in pursuit of Irish tax haven beneficiaries
http://www.finfacts.com/irelandbusinessnews/publish/article_10005560.shtml

More worrying is evidence of Ireland’s dependence on the screwdriver plants of foreign multinationals to create jobs and pay bills. A recent study by economists at Trinity College, Dublin, of the effect of globalisation on the Irish economy revealed that American companies accounted for 77 per cent of the Republic’s total exports, with domestic-owned firms accounting for less than a tenth of the total. Moreover, in 2002 foreign multinational investors paid €2.6 billion in corporation taxes to the Irish Government, 56 per cent of the total paid by companies in that year and almost 10 per cent of all tax collected.

That would hardly matter if one believed that Microsoft, Hewlett-Packard and GlaxoSmithKline were in thrall to the unrivalled skill and productivity of Irish workers or, at the very least, retained an extraordinary affection for Ireland’s climate and cuisine.

The study, by Philip Lane and Frances Ruane, suggests that foreign investors may be drawn for pecuniary reasons. The foreign multinationals earned a yield of 17.5 per cent on their Irish investments in 2003, more than twice the rate of profitability scored by Irish firms investing money overseas. The economists reckon that the enviable rate of return scored on Irish investments is in part due to an overstatement of profits, “the result of the tax-planning activities of multinational corporations, in recognition of Ireland’s status as a low-tax regime”.

To put it bluntly, US corporations are exporting profits to Ireland, transferring by a simple process of book-keeping the locus of added-value in the sale of a computer, reckoning that Ireland’s 12.5 per cent corporation tax rate makes it a more rewarding profit centre than the US or most European countries, including Britain.

This is not sustainable and the Irish Treasury’s golden goose could be strangled more quickly than Common Agricultural Policy subsidies. Even among Irish-American senators in Washington, such a huge subsidy to a foreign government will not stand.

Ireland's dispossessed are real threat to Celtic Tiger
http://business.timesonline.co.uk/article/0,,16849-2140480,00.html

Globalisation and the Irish Economy: Ireland extremely vulnerable to a global slowdown in either the high-tech or financial services sectors
http://www.finfacts.com/irelandbusinessnews/publish/article_10005330.shtml

Sponge Bob · 19-04-2006 11:35pm

Ireland is vulnerable to any global anything because we are an open economy

jimmycrackcorm · 20-04-2006 12:07am

Even at the height of a property boom - is housing not a good investment over a longer term (e.g. 30 years plus). In between it might be possible to have negative equity and other effects but surely the long term growth is practically guaranteed?

whizzbang · 20-04-2006 9:18am

jimmycrackcorm wrote:

Even at the height of a property boom - is housing not a good investment over a longer term (e.g. 30 years plus). In between it might be possible to have negative equity and other effects but surely the long term growth is practically guaranteed?

It might be an alright investment but if you believe you will be able to buy the same property significantly cheaper over the next 5 to 10 years then why buy now?

ronbyrne2005 · 20-04-2006 12:05pm

jimmycrackcorm wrote:

Even at the height of a property boom - is housing not a good investment over a longer term (e.g. 30 years plus). In between it might be possible to have negative equity and other effects but surely the long term growth is practically guaranteed?

yeah it may well be higher in nominal terms but even if houses only rose by inflation rate of 3% they would more than double in thirty years.if house prices are double what they are now in 30 years time it means they have actually declined a bit in real terms. people have the idea in there head that property only goes up in long term and thats right but only in nominal terms and if economy/incomes keeps growing in real terms which requires productivity gains which are falling in this country.

ionapaul · 20-04-2006 12:41pm

silverharp wrote:

if we get 150-200$ oil, it will damage tourism, and owning foreign property in Europe may not look so clever, most of Ryanair's fuel hedges run out this year.
The Fed will be forced to keep raising rates, and unlike the 70's when peoples debts were small, this time around there are alot of people will variable rates and this will crush the US economy
if you hadn't noticed The US and Europe are inflating the currency at around 10% pa this is a big fraud on savers and will only accelerate if oil spikes. I invested in oil and gold 2 years ago and havn't regretted it since.

Lucky / smart man. I've been piling into gold in recent weeks, hits a new 25 year high almost every trading day. LOTS of money is going to go into gold as the global economy gets further and further into trouble.

I've also just handed in my notice, I'm looking into perhaps moving abroad before what I am worried will be a prolonged unwinding of the Irish economy. Either that or I will do what I never thought I'd do - become a civil servant to ride out the economic bloodshed!

Maybe I've been hanging with the bears over at askaboutmoney.com too much...

kluivert · 20-04-2006 1:12pm

I have bee considering moving to england for a couple of years as I dont see any positive outcomes in the next couple of years.

The government will try to fuel the economy but when people realise that the game is up the ecomony in this country will collaspe.

Gold is the only international valuable trading commodity. Always good to ahve some gold hanging around. The phrase that the money is not worth the paper its printed on will become true.

Sponge Bob · 20-04-2006 1:16pm

ionapaul wrote:

Lucky / smart man. I've been piling into gold in recent weeks, hits a new 25 year high almost every trading day. LOTS of money is going to go into gold as the global economy gets further and further into trouble.

and the euro has tracked up too and therefore your net gain in € is a lot less than in nominal $ terms. Care to explain that ?

are you in possession of same Gold or do you pay to store it ? How much as a % ????

Maybe I've been hanging with the bears over at askaboutmoney.com too much...

Them bears are everywhere, except at pyramid scheme meetings in Cork and Kerry where they go a Bullin instead

Pa ElGrande · 20-04-2006 1:28pm

jimmycrackcorm wrote:

Even at the height of a property boom - is housing not a good investment over a longer term (e.g. 30 years plus). In between it might be possible to have negative equity and other effects but surely the long term growth is practically guaranteed?

In order to answer that you need to define what criteria meet a "good investment" for you?

You probably know the institutional maxim "The value of any investment and any income from it may fall as well as rise and you may not get back your original investment." In 30 years time when you might want to sell, the bottom may have fallen out of the property market at that time. It has done so before, take a look at the abandoned houses all along the west of Ireland.
Most people who have made money on property got lucky, they bought when a "house was for nesting, not investing".
In post-2000 Ireland they are retiring, they claim property was a good investment on their part and pass this "wisdom" on to the younger generation, even though this was not their goal when buying the house. :rolleyes:

silverharp · 20-04-2006 1:57pm

Re gold, I'd say gold is topping at the moment, I'm waiting until the summer before I buy more. I bought mine at www.gold.ie , they are good guys. if you felt you wanted to get in and out I'd go for www.goldmoney.com you can buy on line and the account maintenance is cheap, just be aware of the spread. If you take possession of say 1oz coins there is about a 5-6% cost over spot. To put it simply if interest rates are below inflation then gold is a good bet.

Although Ireland is exposed remember the US companies are here to service the European market and that isn't going to go away overnight, you might have a situation where property drops but has little affect on u****loyment.

whizzbang · 20-04-2006 2:01pm

silverharp wrote:

Re gold, I'd say gold is topping at the moment, I'm waiting until the summer before I buy more. I bought mine at www.gold.ie , they are good guys. if you felt you wanted to get in and out I'd go for www.goldmoney.com you can buy on line and the account maintenance is cheap, just be aware of the spread. If you take possession of say 1oz coins there is about a 5-6% cost over spot. To put it simply if interest rates are below inflation then gold is a good bet.

Although Ireland is exposed remember the US companies are here to service the European market and that isn't going to go away overnight, you might have a situation where property drops but has little affect on u****loyment.

you could also buy into a gold fund, I have some money in the Rabo Direct one, its going quite well.

Sponge Bob · 20-04-2006 2:33pm

emmmm what about Fab24 and especially Fab24-2 ?????

ionapaul · 20-04-2006 2:47pm

No, I buy via the Streettracks GLD ETF, so no storage fees, though of course the managers get their cut via an annual adjustment in gold-share ratio. The whole Gold-$-€ flow is of course something I keep track of...in fact, I don't hold any € equities at the moment, mainly £ and $, another thing to worry about!

ionapaul · 20-04-2006 2:53pm

I should state although I see lots to worry about in the Irish, European, American and World economies at the moment, I'm not all doom and gloom and don't think Ireland will go back to the 'bad old days' of the '80s anytime soon. Most people will be fine, lots of buy-to-let'ers will lose thousands, many might lose tens of thousands, but most will come out the other side wiser. Most owner occupiers won't care that much about negative equity, just might have to stay a few years longer in a home they hoped to 'trade up' from quickly. But most of us will be fine, life goes on, there is always money to be made and isn't life grand when the sun is shining and you're sitting with an icecream on the grass in Stephen's Green

silverharp · 20-04-2006 4:47pm

Whizzbang, I like Rabo, I bought their World Energy Fund in Nov after the dip in energy share prices. If you don’t already listen to them already there is a great website www.financialsense.com they have pod cast every week (updated Sat) and they do a good all round analysis of precious metals /energy and the markets. Their general view of gold at the moment for what it’s worth is that the Majors are valued as if they have gold in the ground at around $670 , ie premium to their NAV, where as the juniors are selling at a discount to NAV, as the XAU index (unhedged gold producers) hadn’t moved with the gold price this was seen as a non confirmation, hence the expected pull back in the bullion price. I’m holding after following the work of Marc Faber and he is of the opinion that most assets classes should be cheaper later in the year,

whizzbang · 20-04-2006 5:38pm

silverharp wrote:

Whizzbang, I like Rabo, I bought their World Energy Fund in Nov after the dip in energy share prices. If you don’t already listen to them already there is a great website www.financialsense.com they have pod cast every week (updated Sat) and they do a good all round analysis of precious metals /energy and the markets. Their general view of gold at the moment for what it’s worth is that the Majors are valued as if they have gold in the ground at around $670 , ie premium to their NAV, where as the juniors are selling at a discount to NAV, as the XAU index (unhedged gold producers) hadn’t moved with the gold price this was seen as a non confirmation, hence the expected pull back in the bullion price. I’m holding after following the work of Marc Faber and he is of the opinion that most assets classes should be cheaper later in the year,

yep, I have some of those energy units as well, they are doing nicely since November alright!

I am not very well educated in the full workings of the gold market but I am aware that in general gold goes up when there is uncertainty in the air and when stocks go down. Do you believe that the price of gold will go down later in the year even though there is a lot of uncertainty with Iran, oil prices and property bubbles?

I'll have a listen to that podcast, hopefully it won't be too far over my head!

silverharp · 20-04-2006 8:47pm

whizzbang wrote:

Do you believe that the price of gold will go down later in the year even though there is a lot of uncertainty with Iran, oil prices and property bubbles?

I try to be patient and sit back when things get over excited like now, I have roughly 50% of what I want to invest in energy and precious metals, and it is always a balance of not wanting to be left behind. But my guess is that alot of this news is priced in, and that alot of the rise is due to momentum driven tech funds.

If there was a recession in the next year (US) then alot of commodities would drop and I guess gold as well, when the Fed cuts rates then this is the time to plough in more cash.

in the 70's gold went from $190 back to nearly $100 before ending up at $800 so it is always useful to keep some powder dry

Robert Burns · 21-04-2006 5:25pm

The energy you should be watching is the energy Wall Street puts behind buying the LSE
and the Street all ready owns 14.9% of it.
Everyone seems to have bought into this Global Economy nonsense so keep your eyes open
for whoever it is that wants to run that economy. They'll tell you what your stock is worth.

Pa ElGrande · 30-04-2006 11:25am

Hints of all not being right under the surface.

The regulator took action after carrying out an inspection of Monaghan Credit Union last year. It is understood credit unions generally make a provision of 100 per cent for any bad debt that had not been repaid within 53 weeks. However, one source said the rules allowed that the debt would no longer be classified as bad if even €1 was allocated against the debt as late as week 52.

He said some credit unions had been using this loophole to reduce the stated level of bad debts on their balance sheets, in order to leave funds available to pay their members a dividend. He described the policy as ‘‘putting more sand on the landmine. It covers it up, but it doesn’t make it any less dangerous’’.

Financial Regulator had doubts over Monaghan Credit Union guarantee
http://www.sbpost.ie/post/pages/p/story.aspx-qqqt=THE%20MARKET-qqqs=themarket-qqqid=13857-qqqx=1.asp

Pa ElGrande · 30-04-2006 12:06pm

Irish outlook: Damien Kiberd: You don't know what you've got till it's gone
http://www.timesonline.co.uk/newspaper/0,,2769-2157675,00.html

THE lobby group representing the country’s petrol stations claims the number of outlets has dropped by 400-500 in the last five years, and blames this on the small profit margins on petrol. The only thing keeping many of them in business, apparently, is the sale of sweets, newspapers and soft drinks.

Having seen the books for one station, I have to agree the above is true for a lot of stations.

With some of the world’s biggest companies taking a strategic decision to withdraw from petrol retailing in Ireland, it seems likely that the flood of sites coming to the market will continue. Motorists can expect to drive much greater distances in future to fill their tanks.

Every day we are seeing further evidence of how rising land values are affecting business transactions. Not only are petrol stations disappearing, but so too are schools, playing fields, hotels and pubs. Indeed, in one suburb alone, Ballsbridge, the pace of change is extraordinary.

But the wider implications of untrammelled development have not yet been considered by the government or economic planners as the construction boom continues to wag the economic dog.

Lets start

Housing built in areas prone to flooding.
Long commute times because of lack of affordable housing near where people work.
Increased energy bills because of the the lengthy commute on clogged arterial routes.
Large fines under the Kyoto Agreement due to above.
Increasing energy bills due to depletion of the cheap sources of energy (Peak oil concept).
Long term decrease in the population due to cost of childcare and mortgage.
Two incomes needed to support a household, cars & mortgage.
A generation of latch-key kids, bored out of their minds in suburbia.

Pa ElGrande · 01-05-2006 7:50pm

Robert Burns wrote:

The energy you should be watching is the energy Wall Street puts behind buying the LSE
and the Street all ready owns 14.9% of it.
Everyone seems to have bought into this Global Economy nonsense so keep your eyes open
for whoever it is that wants to run that economy. They'll tell you what your stock is worth.

Interesting this
http://www.forbes.com/facesinthenews/2006/03/13/lse-furse-greifeld-cx_cn_0313autofacescan04.html

stepbar · 10-05-2006 12:44am

A good sign the "economy" is goin down the swanny is when you see people getting mortgages for houses that are valued at 10 times their gross pay!! And its been happening for years now!! Add to this the era of 100% mortgage the likes of BOI and PTSB are plugging and the "preapproved loans" BOI constantly offer and what you get is the biggest economic fraud going. People constantly forget that your house is not an asset per se until the day the bank hands back the title deeds and u have a cheque in ur back pocket from the sale and even at that u might not even get back the entire worth back. Until that day ur house is a Liability, most people seem to forget this. Interests rates are historically low but this wont last for much longer, the ECB have already signaled that they are likely to approve a rise in the key base rate next month. What this means for homeowners is that cost of their mortgage could hit 4%. Finding another €100 odd eur on a 300,000 mortgage, 35 year loan (which are becoming increasingly popular these days), could be challenging. And remember that €100 eur has a knock on effect, the local publican wont get the few extra quid from you, ull think twice about having that latte before you go to work in the morning and you might not see as many new cars on the road. So it all has a knock on effect, and whats even more disturbing is that more and more people are waiting to get on the ladder, talk about the blind leading the blind. The day every1 become a financial expert is the day we should all become worried and believe me there is a lot of them out there as it is. Thats my spiel for the time being, I only hope the public in general dont go mad spending their ssia money over the next few years because we will be really be in the s**ts

Pa ElGrande · 10-05-2006 9:07pm

stepbar wrote:

I only hope the public in general dont go mad spending their ssia money over the next few years because we will be really be in the s**ts

A lot of people I have spoken to are using the SSIA to pay off existing debts, so while it will provide somewhat of a boost to the economy, it won't be the boost the retailers expect. The SSIA effect as I see it, is psychological, creating a buzz in the country which is leading to increased spending/borrowing.

In 2006, we are cocooned within the bubble, inhaling it's rarified air, high above the clouds and can't, nay, don't want to see beyond its confines.

Step back and watch what is happening abroad as the housing bubbles around the world begin to pop one by one.

DENNIS ORROCK: By the end of 2006 there will be a percentage of a decent size of the home owners in Sydney and Melbourne who will be in a position of negative equity by the end of 2006. That's based on the 2005 property performance.

Australia: Mortgages rise following property boom
http://www.abc.net.au/pm/content/2006/s1631068.htm

A GROWING band of Sydney home owners who bought near the peak of the property boom in late 2003 are facing negative equity as property prices sag.

Property investors hit hard
http://www.smh.com.au/news/national/property-investors-hit-hard/2006/05/06/1146335933244.html

Many of these homeowners may soon face a "can't pay, can't sell, can't refi" situation that could lead them to lose their homes.

The negative equity epidemic
http://moneycentral.msn.com/content/Banking/Homefinancing/P148861.asp#msnhp

Pa ElGrande · 10-05-2006 10:49pm

"'The Grip of Death' is a literal translation of 'mortgage', when the owner of a house pledges his or her house to another with a handshake...unto death."

"The Grip of Death: a study of modern money, debt slavery and destructive economics" by Michael Rowbotham (Jon Carpenter Publishing, 1998)
http://lowbudgetlife.com/readarticle.php?article_id=1

You can read chapter one from the link above, the book is available on Amazon.co.uk
http://www.amazon.co.uk/exec/obidos/ASIN/1897766408/026-4325621-7962838

The Irish Economy - Worrying Signs?

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