# George Lee's Boom-Discuss here



## bearishbull (1 Jun 2006)

I have to say i was quite surprised with the programme,he said everything i have been feeling and saying here on askaboutmoney but i didnt expect to hear it on mainstream media in such a clear and frankly frigtening way!

i think this programme will have a similar impact to the rip-off republic programmes of Eddie hobbes and i think the writtings on the wall for this economy unless we drastically change course


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## DrMoriarty (1 Jun 2006)

I didn't see the programme, but apparently you can discuss it with George hisself right [broken link removed], from 1 to 2pm tomorrow Friday.


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## bearishbull (1 Jun 2006)

it was a great bit of tv,the first half of show was so so positive and the second half was so so negative,suprised me, i expected the rose tinted view that we usually get through media here.


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## fatmanknows (2 Jun 2006)

Nice to to hear an indepentent view on the current state of play - no vested interest here. Gave it to us right betweeen the eyes. How many more left out there who believe we can continue to spew out nothing but new houses in this ecomomy. As Ray Grehan said himself -" if we continue at this we'll all end up with 5 or 6 houses". Property investors may have good reason to be shaking in their cots tonight. Wonder what Mr ECB man has in store for us next week.


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## Theo Goon (2 Jun 2006)

Yeah good stuff except forthe constantly throbing musical back drop that never stopped from start to finish, did you not notice that. it was giving me a headache. Good music in it, but it was a struggle sometimes to hear what was being said I thought, it was like straining to hear your friends in a pub over the blaring music.


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## sherib (2 Jun 2006)

A very sobering bit of TV - George as always a rock of good sense. Was it a coincidence that the programme coincided with the issuing of the first SSIA cheques? Anyhow it's official - the Celtic Tiger is dead and our only hope is to market Ireland as a "creative" economy. Maybe that will be expanded upon tomorrow. 

As most of us suspected, he confirmed that in the past five years two thirds of all new jobs for men were in construction and two thirds of all new jobs for women were in the Public Service.


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## Peadar (2 Jun 2006)

Some very good points were raised on the cost of R&D in this country even compared to a supposed high cost economy like Germany. The property prices are making it more expensive to do business here, as people seek a return on their highly valued assets, thus driving up rental costs per sq. foot.

Peadar


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## Duplex (2 Jun 2006)

The programme was an autopsy for the Celtic Tiger.  Lee presented the unvarnished facts; falling competitiveness, falling productivity, falling manufacturing employment, growing indebtedness and an over reliance on the construction and public sectors.  Lee made it clear that the last few years were not a continuation of the early Tiger, but something else, something far less sustainable.   The banks and politicians have continued to milk the tiger myth, while stuffing their respective swag bags, only occasionally stopping to yell ‘doom monger’ at anyone who has questioned their actions.


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## Guest107 (2 Jun 2006)

The program was nothing new for me. 

George, BTW,  has been <insert someting important sounding here> in RTE for years and years and years and only made one notable program in ALL that time . 

And he COMPLAINS about PRODUCTIVITY the cheeky bugger !!!!!!!!!!


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## beattie (2 Jun 2006)

It will be interesting to see the reaction from 2 quarters to this show. Firstly will there be any change in the numbers signing up for new units and secondly how long will it take the property bulls to produce another report,survey etc to say everyone has full faith in property.

Well done George!


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## CCOVICH (2 Jun 2006)

Wasn't this a repeat from a few months ago?


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## Duplex (2 Jun 2006)

CCOVICH said:
			
		

> Wasn't this a repeat from a few months ago?


 
No.


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## Askar (2 Jun 2006)

Should probably have called the programme 'Gloom'! I agree that there are plenty of negatives in the economy. Yappy/folksy economists (such as Lee and Williams)  seem to revel in this.  As he admitted they didn't predict the tiger, but they are doing their best to predict the bust, and, of course, they will be right one day (but its taking a long long time for them to do the 'I told you so' dance, which must really irritate them, as well as undermine their credibility to properly diagnose the economy, or indeed, predict direction of interest rates for 2004/5 - which is a 50% bet). Personally, I dont think this programme was particularly enlightening, and was simply applying some basic undergraduate economics to some economic indicators, with a few interviews thrown in. A bit lazy really! Macroeconomics is a spoofers game!

Incidentally, there seems to be an unending stream of reports and initiatives since 2000, but not much else, exhorting us to move up the 'value added chain' and become a 'niche knowledge economy'. Some political accountability for this would be nice. All we produce are property billionaires and not knowledge billionaires a la Bill Gates, and our economic infrastructure still remains below par. 

Also, strange how we have moved away again from last years fashionable argument that, as a mature economy, we will become more of a services economy (a bit like the US and UK).


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## demoivre (2 Jun 2006)

Askar said:
			
		

> Should probably have called the programme 'Gloom'! I agree that there are plenty of negatives in the economy. Yappy/folksy economists (such as Lee and Williams)  seem to revel in this.



If I recall correctly McWilliams has been calling the top of the property market since 2000. Property prices have risen 100% and more since then so even a 30 or 40 % fall in property prices will have seen him get it manifestly wrong imo. If McWilliams , Lee and the like were really any good at analysing markets they would be making seven figure salaries in The City !


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## Duplex (2 Jun 2006)

Macroeconomics is not a spoofers game, though there are many out there that would like to perpetuate this fallacy.  Lee spelt out whats happening in the global economy, the seismic shifts in wealth and power, and the challenges to the consumerist societies of the West these shifts will generate over the coming generation.  Knowledge is power and it suites many to keep the the lumpen masses ignorant of the real issues that will effect their lives.


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## redo (2 Jun 2006)

I watched it last night.  If we think the FTB are feeling under pressure to buy, imagine what the developers feel, when trying to sell their "Select", "Luxury", "Spacious" way of life.  The FTB should not buy anymore.  The developers are quaking in their boots.


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## soma (2 Jun 2006)

bearishbull said:
			
		

> i think this programme will have a similar impact to the rip-off republic programmes of Eddie hobbes


To be honest I think that's extremely wishful thinking. This programme will simply not translate into the "water-cooler conversation".

The subject is unpalatable for some people, but incomprehensible for most.


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## wowser (2 Jun 2006)

redo said:
			
		

> The developers are quaking in their boots.


I doubt it. As long as there are still people queuing (and there are) to buy houses I don't see any end to the madness...


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## gearoidmm (2 Jun 2006)

Missed it, any links to where I might see it (what was the program called)?


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## Askar (2 Jun 2006)

Duplex,

Dont agree. It is a spoofers game. The principles of macroeconomics and the variables underlying the theories are not clearly understood. For eg expansionary fiscal contraction (one of the recognised pillars of the celtic tiger) did not fit into a standard Keynes theory of how to expand the economy. Change the variables and the outcomes can change. IMHO without empirical research and a clear understanding of the assumptions underlying that research, you cannot state conclusions/hypothesis in a meaningful way. Taking a load of variables (as Lee did) and making subjective broad conclusions (albeit consensus conclusions of our folksy economists), is not proof of anything, nor is it necessarily empowering the masses. In fact, it is doing just what you are accusing me of doing - potentially perpetuating a fallacy. IMHO we only have fairly superficial understandings of economics (a bit like doctors in the middle ages). Since my MSc in economics is in microeconomics I am possibly a bit biased, but I prefer my economics based on game theory and tested in real world conditions. I really have no time for DIY man and all the other conveniant classifications used to lecture 'the masses' on a particular economic point of view.


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## nelly (2 Jun 2006)

i have bought this year and watched it with my sister (final year student) who hasn't a prayer in getting onto the property ladder except the affordable way. Anyhow i don't know who was more depressed after it - me because my house price might flop or her because she might be graduating into a crashing economy.


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## runner (2 Jun 2006)

I liked it. It was just a television program , done by a television presenter and not a lecture in micro/macro econimics and thats how i took it. Sure the conclusions are almost certainly wrong as nobody can really predict whats likely to happen next. It did make many valid points regarding our economy that a lay person like myself could understand and therefore I think it was worthwhile. It did present undisputed facts re our economy and its dependence on the construction industry, and the dependency of the government and the dept of finance on its continued growth. If it serves to warn some people of the possible downside of this growth and prosperity model I think it will serve its purpose.


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## fatmanknows (2 Jun 2006)

Askar,

Respect to your greater finer understanding of microeconomics than most. But I would think one does not need such a deep knowledge of economics to see the outline picture. Parking Keynesian theories etc  aside there are such glaring facts standing out which I think Lee was only pointing at. As far as the role property is playing in the economy, a simple understanding of maths might just as easily help one arrive at just how unlikely it is for the prevailing fundamental imbalances to be sustained.


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## Neffa (2 Jun 2006)

redo said:
			
		

> I watched it last night. If we think the FTB are feeling under pressure to buy, imagine what the developers feel, when trying to sell their "Select", "Luxury", "Spacious" way of life. The FTB should not buy anymore. The developers are quaking in their boots.


 
I really doubt this. Until people actually see falls in price with their own eyes, the mania will continue.


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## gearoidmm (2 Jun 2006)

Neffa said:
			
		

> I really doubt this. Until people actually see falls in price with their own eyes, the mania will continue.


 
Agreed, witness other threads on this site - people desperate to get on the ladder and willing to do anything for it.  The feeling of doom and gloom that pervades certain threads here is not reflected among the wider community.

People have been saying that all this is unsustainable for years but the general public just doesn't believe it any more.  People watch programs like lst night, nod their heads sagely as if they understand it and then go back out to the EA to buy their next investment property.

It will take something major to change this psychology and until then, no-one is quaking in their boots


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## Duplex (2 Jun 2006)

Askar said:
			
		

> Duplex,
> 
> Dont agree. It is a spoofers game. The principles of macroeconomics and the variables underlying the theories are not clearly understood. For eg expansionary fiscal contraction (one of the recognised pillars of the celtic tiger) did not fit into a standard Keynes theory of how to expand the economy. Change the variables and the outcomes can change. IMHO without empirical research and a clear understanding of the assumptions underlying that research, you cannot state conclusions/hypothesis in a meaningful way. Taking a load of variables (as Lee did) and making subjective broad conclusions (albeit consensus conclusions of our folksy economists), is not proof of anything, nor is it necessarily empowering the masses. In fact, it is doing just what you are accusing me of doing - potentially perpetuating a fallacy. IMHO we only have fairly superficial understandings of economics (a bit like doctors in the middle ages). Since my MSc in economics is in microeconomics I am possibly a bit biased, but I prefer my economics based on game theory and tested in real world conditions. I really have no time for DIY man and all the other conveniant classifications used to lecture 'the masses' on a particular economic point of view.


 
Then how would you interpret the 'load of variables' such as falling competitiveness, rising indebtedness, a miniscule domestic export sector, rising interest rates and commodity prices.  Employ some gaming theory to these factors.  It is facile in the extreme to suggest that the blindingly obvious is invisible to those not academically 'qualified' to interpret with their own eyes.  Robert Shiller the professor of Economics at Yale has made similar observations with regard to the American economy, to those George Lee uttered yesterday evening. Many commentators agree that we have reached a tipping point in the current cycle, I tend to agree.  (I'd be happy to pm you with my qualifications if you are curious.)  

I would also be grateful if someone, anyone:  could offer an alternative interpretation of the facts presented last night.


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## Glenbhoy (2 Jun 2006)

> And he COMPLAINS about PRODUCTIVITY the cheeky bugger !!!!!!!!!!


Writes 2Pack from his work computer!!


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## conor_mc (2 Jun 2006)

Glenbhoy said:
			
		

> Writes 2Pack from his work computer!!


 
Touche!


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## Guest107 (2 Jun 2006)

conor_mc said:
			
		

> Touche!


my word exactly Conor but its _touché _.  . PM me when you are ready dude and we'll chill in the sun with a latté each for the next 2 hours and feck this shower . 

Why did George not do this program in 2002 when the current boom took off ?


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## bearishbull (2 Jun 2006)

cant see how anyone can argue with
-house prices being so far ahead of incomes
-interest rates rising and unlikely to be this low again for many years/decades
-our exports being nearly toatally from multinationals who will move on,exports are relatively stagnant and imports of everything rockets
-construction plays a massive and dangerous role in economy
-debt levels are huge and growing bigger by the day while cost of servicing it grows
-the countries competitiveness is well down the list and getting worse
-new jobs are mainly coming from unproductive areas
-we are higly open/globalised economy meaning we are at mercy of global capital flows and competition from abroad,any international shock will hit us more than most

Basically you cant sustainably grow an economy purely on consumer spending on imported cars etc and on houses. 
Add in the lack of any monetary controls /own currency which could change to address imbalances in our economy and i think we're fecked


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## DrMoriarty (2 Jun 2006)

There's no 'é' in _latte_, 2Pack... 

So — any of you _latte_-drinking people going to [broken link removed] over your lunchbreaks?


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## kane3000 (2 Jun 2006)

Just how easy would it be for the likes of Intel, Microsoft etc. to up sticks and move to a cheaper economy ?
Have they not made a huge investment in Ireland, especially Intel.


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## Neffa (2 Jun 2006)

I don't think the reason many are here is primarily to do with cheaper wages - it is much more the 12.5% corporate tax rate. Remember Google managed to lower their effective global tax rate by 3% (down from something like 34 to 31) just by opening their EMEA centre in Dublin and pushing the European financial flows through it. Microsoft save a similar sum.


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## DrMoriarty (2 Jun 2006)

Any of the newer EU member states would offer the same tax advantages, and places like Estonia could easily soon match us (or better) in terms of IT infrastructure, highly-educated workforce, etc...


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## redo (2 Jun 2006)

kane3000 said:
			
		

> Just how easy would it be for the likes of Intel, Microsoft etc. to up sticks and move to a cheaper economy ?
> Have they not made a huge investment in Ireland, especially Intel.


Haven't you heard? Intel are reviewing their operations Worldwide.  It has been mentioned that Intel are considering selling their chip plant as a going concern.

The FTB are the oxygen to this property bonaza.  STB can trade up due to the rise in property prices (equity) that FTB create.  If banks stopped lendning to FTB the whole house of cards would collapse.  I'm sure people are sic (sic) of hearing it, that it is like all the cork-eens with their Liberty Investment Scheme.


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## bearishbull (2 Jun 2006)

what could we expect in an economy where pyramid schemes still flourish despite numerous warnings.

ya can watch the whole programme online at address below,forward the link to your mates and family to have them prepared
[broken link removed]


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## bearishbull (2 Jun 2006)

would i be right is saying microchip production isnt highly labour intensive and raw material costs arent set in ireland?


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## nelly (2 Jun 2006)

i second that - i work for a nultinational and half the employees are in the Finance department, every penny seems to be shuffled through Ireland. Its keeping a certain amount of qualified high earning jobs here alone. The IDA should keep the low tax rate but on a basis that a certain precentage of the business is R&D, Manufacturing, sales etc.


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## Neffa (2 Jun 2006)

bearishbull said:
			
		

> would i be right is saying microchip production isnt highly labour intensive and raw material costs arent set in ireland?


 

Yes - requirement is space, stable power and earthquake-free. "Silicon" Valley has little or no chip fabrication due to the geological nature of that area.


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## Purple (2 Jun 2006)

bearishbull said:
			
		

> would i be right is saying microchip production isnt highly labour intensive and raw material costs arent set in ireland?


It requires a huge ammount of engineering back-up but unit costs are not very labour sensative. Having said that IBM have closed most of their chip manufacturing, Xilinx are very quite and NEC are gone...


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## DrMoriarty (2 Jun 2006)

Latest from the George Lee webchat extravaganza...  
*



Maura: Seen the piece you did on SSIAs on last night's news. Are you turning into a bit of a Eddie Hobbs-type guru?
George: Eddie who?? 

Click to expand...

*


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## redo (2 Jun 2006)

Just imagine what effect on the local property market in Leixlip/Lucan areas if all of a sudden there were 350 semi houses for sale at 381.


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## Mrs Mac (2 Jun 2006)

Had to laugh at Ray Grehan talking about the new development - The Grange "people want to buy into the lifestyle and the dream of living in one of these superb units".  
A one bed ranges from 450k up to 750K for a penthouse (feel free to correct me on the figure for the penthouse).
Some people only want a roof over their heads to call their own not a bloody lifestyle.
The writing is on the wall me thinks


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## Salmon (2 Jun 2006)

How can I view the chat from earlier on on the rte web site? I cant find a link to it anywhere on the site!


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## PMU (2 Jun 2006)

It was a good programme, by RTE standards, but the analysis, to be charitable, leaved a lot to be desired.  What we do or do not do is irrelevant. Ireland is a small and the most globalised economy in the world, as the programme pointed out. So, in reality, it all depends on Paul Bernanke, Chairman of the Fed, not on policy making in Ireland..  If US interest rates are increased by more than what is required to curb US inflation in the near future, US stock markets will decline and will bring down world markets.   This will, inter alia, affect inward investment in Ireland and Irish companies that export to the US, and also your pension if it is invested in those companies..  If the US dollar continues to decline precipitously, and if Bernanke doesn’t get it right, any over increase in the US interest rates to prop up value of the dollar would kill off the US, and by implication the international, housing market boom, on which our economy appears to be based.  So let’s say three decades of the rosary tonight that Bernanke gets it right, the way his predecessors Volker and Greenspan did.  The only serious worrying point that we can control is our continuing decline in competitiveness.
.


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## bearishbull (2 Jun 2006)

PMU said:
			
		

> It was a good programme, by RTE standards, but the analysis, to be charitable, leaved a lot to be desired. What we do or do not do is irrelevant. Ireland is a small and the most globalised economy in the world, as the programme pointed out. So, in reality, it all depends on Paul Bernanke, Chairman of the Fed, not on policy making in Ireland.. If US interest rates are increased by more than what is required to curb US inflation in the near future, US stock markets will decline and will bring down world markets. This will, inter alia, affect inward investment in Ireland and Irish companies that export to the US, and also your pension if it is invested in those companies.. If the US dollar continues to decline precipitously, and if Bernanke doesn’t get it right, any over increase in the US interest rates to prop up value of the dollar would kill off the US, and by implication the international, housing market boom, on which our economy appears to be based. So let’s say three decades of the rosary tonight that Bernanke gets it right, the way his predecessors Volker and Greenspan did. The only serious worrying point that we can control is our continuing decline in competitiveness.
> .


we can invest more in r&d and try to control rampant property inflation which is distorting the economy.
p.s its ben bernanke


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## shnaek (2 Jun 2006)

PMU said:
			
		

> So let’s say three decades of the rosary tonight that Bernanke gets it right, the way his predecessors Volker and Greenspan did.


Some people would criticise Greenspan for flooding the world with cheap money. That money has to be paid for by someone. All he has done is put things off and ensure a large correction in the future, in terms of Dollar value or interest rates.


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## Duplex (2 Jun 2006)

Greenspan was Mr Bubble and Bust. He has sold America into penury by following a monetary policy that has created massive deficits, negative savings rates, falling productivity, falling real incomes and a bursting housing bubble.  But singling out the Fed chairman is probably too simplistic, he was following the orders of the new 'corporate government'


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## Betsy Og (2 Jun 2006)

I think it did illustrate a good point that the latter day boom is a bit of a "zero sum game" in terms of Ireland as a country.

i.e. we are not generating wealth as a nation, we are just redistributing amongst ourselves, with the transfer being from the young to the old (as opposed to the normal other way around) and its all paid for with debt.

So if someone ever shouts stop on the construction industry, we may not have enough to offer the rest of the world to keep us all working and keep cash coming in.

On an individual level all we can do is try to each move up the food chain in terms of skilled employment, pay down our debt and not kid ourselves that we can spend forever with no consequences. Anyone in a manufacturing job should be trying to think about Plan B - and thats not news either, the flight of manufacturing job is on the go with decades, the death of Donegals textile industry was like a ship sailing in from the horizon, everyone could see it, it was just a matter of time before it arrived.

As for the country as a whole, competitiveness and the famed upskilling is probably the name of the game. Lets hope our infrastructure is up to scratch before the tax revenues start to contract, will Fianna Fails next election jingle be "Little done, loads spent".


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## Michael (2 Jun 2006)

I agree that it will be a rocky road ahead and interest rates and competitiveness
will play a large part in how our future proseprity (or lack of it) pans out but the
negative factors mentioned earlier should be balanced with the positives:

Lowest unemployment in EU
Still among the youngest populations in EU
Expanding population
Good regulatory environment to do business
Among lowest Corporation taxes in EU
Among lowest income tax on earnings in EU
National Pension Reserve Fund (lot done more to do)
English speaking country still a pulling factor 
Lowest National debt to GNP ratio in EU

I am sure I am missing some:

I really don’t think things look too bad in the short term. A lot will depend on how 
proactive the Government is about trying to head off potential pitfalls, although
the big negative factor, rising interest rates, is beyond it’s control.

The very popular www.propertypricecrash.com UK website is still going strong after 3 years,  as the UK goes through a nice soft landing. We have been hearing the same negative sentiment here for even longer and our biggest challenge will be when it comes to trying to manage our own soft landing  But for a few more years I can continue to see through the negatives. 

It remains to be seen who ends up saying “Told you so!” .


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## RiceCakes (2 Jun 2006)

Michael said:
			
		

> <long, unnecessary quote removed by Dr M.>


So the fastest ever housing price rises doesn't bother you?, gold on the way up also..sure house price inflation can go at increasing rates forever!!

Interesting times...time to save imho.


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## Michael (2 Jun 2006)

No, house price rises never bothered me since I climbed on the ladder (but I do feel for FTBs).


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## redo (3 Jun 2006)

redo said:
			
		

> Haven't you heard? Intel are reviewing their operations Worldwide.  It has been mentioned that Intel are considering selling their chip plant as a going concern.
> 
> The FTB are the oxygen to this property bonaza.  STB can trade up due to the rise in property prices (equity) that FTB create.  If banks stopped lendning to FTB the whole house of cards would collapse.  I'm sure people are sic (sic) of hearing it, that it is like all the cork-eens with their Liberty Investment Scheme.



[broken link removed]


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## dam099 (3 Jun 2006)

Michael said:
			
		

> Lowest National debt to GNP ratio in EU


 
Actually no its not. I thought we were second (after Luxembourg) but interestingly from this piece it would seem 3 of the new EU states have lower ratios aswell.


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## gearoidmm (3 Jun 2006)

Michael said:
			
		

> Lowest National debt to GNP ratio in EU



What is our ratio of private debt to GDP?


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## whizzbang (3 Jun 2006)

Michael said:
			
		

> Lowest unemployment in EU



unfortunatly a huge proportion of employment is in the building sector, so if the property market weakers this could change very quickly.


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## OilKing (3 Jun 2006)

Michael said:
			
		

> I agree that it will be a rocky road ahead and interest rates and competitiveness
> will play a large part in how our future proseprity (or lack of it) pans out but the
> negative factors mentioned earlier should be balanced with the positives:
> 
> ...


 
To compare our Property Bubble to that of the UK is erroneous for the following reasons. 

In 2004 the UK was experiencing almost 20% house price growth in some area's. Their Central bank attempted to cool the market by increasing interest rates from 3.5% - 4.75% (an increase of about 35%). In a short few months the housing market had come to a grinding halt and house price appreciation was down to just about core inflation (2%) and even went negative in some area's. In order to calm fears of a crash the Central bank cut interest rates by 0.25%. The market remains pretty stagnant.

We in Ireland are heading for at least 2.75% this month (increase of 37.5%) and to as much as 3.5% by the end of the year (increase of 75%). How high will they go, who knows but one thing is for sure, if our market begins to stumble the ECB will not be so kind as to cut interest rates to prop up our falling market.

In Ireland we also have 1 person in 8 employed in the construction industry. The UK has nowhere near this figure employed in construction so our labour market is far greater exposed to a slowing construction industry. Also, when UK house prices stalled in 2004, consumer spending plummeted and is still in the doldrums. 

Your so called "nice soft landing" for the UK has been far from nice and even when ours materialises it will be ugly as unemployment increases due to lay offs in the construction industry, falling consumer spending due to no more MEW (mortgage equity release) and the harsh reality that we have no control over interest rates.​


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## OilKing (3 Jun 2006)

bearishbull said:
			
		

> what could we expect in an economy where pyramid schemes still flourish despite numerous warnings.
> 
> ya can watch the whole programme online at address below,forward the link to your mates and family to have them prepared
> [broken link removed][/quote
> ...


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## Berni (3 Jun 2006)

It will play in RealPlayer, you can download it here http://uk.real.com/player/?&src=google_ppc_realmusic_nonuk_player,ZG.uk.rm.rm.hd.def - the free version on the right is all you need


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## bearishbull (3 Jun 2006)

Michael said:
			
		

> positives:
> 
> Lowest unemployment in EU
> Still among the youngest populations in EU
> ...


-unemployment now means nothing in ten years time.
-young population has added to problem due to swelling demand for houses,if prices dive and unemployment rockets then young will be first to leave.
-Population is expanding mainly due to construction and consumer spending related jobs,these people will be first to leave in any recesssion/downturn and that will rapidly reduce demand in economy from them for good services and housing.
-regulatory environment may be good but some commentators have said too lax in financial services, other jurisdictions are becoming more business friendly in regulatory stakes.
-lowest income tax wont help stop anything
-pension fund is for the public service and amounts to very little per person.
-Many eastern european speak english as do all uk and many other competitor countries.
-Debt's maybe a plus but again maybe we're better borrowing more to invest in R&D and sustainable wealth creation for the future.
-yes your missing the fact that none of these things will stop manufacturers leaving to lower cost locations,also they wont stop a correction in the massively overvalued and dangerous housing market,they wont make us most competitive innovative or economically sustainable,they wont stop us from not having control over monetary policy and currency levels and they wont stop us from having stagnant exports and booming imports and inflation .


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## dodo (3 Jun 2006)

If you keep talking about about a downfall then you  increase the chances of one, George Lee is only saying what he said over 3 yrs back and   we keep getting stronger, again we have a couple of billion in taxes taken in already. This is a great Country and it makes me sad to hear so many begruders and down beat people. If we where to take his advice we all would have sold our houses and bought a few yrs later for a cheaper price,


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## Purple (3 Jun 2006)

1 in 8 of may well be employed in the construction industry but the other big job creation sector is the public service. If things go down hill we will still have to pay the public servants, most of the surplus workers in the construction industry will be back in Eastern Europe or will have migrated to the next boom economy. Either way most of those who loose their jobs will not be a financial burden on the state.
Much like those who will not be able to pay their mortgage if the proverbial bubble bursts with the increases in numbers and wages in the public sector we as a country are giving ourselves fixed overheads that cannot be covered in a downturn. That concerns me more than out reliance on the construction industry. In saying that I am not offering an opinion one way or the other about the necessity for that job creation or whether or not the pay rises were deserved. In the context of this discussion such issues are irrelevant.


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## whizzbang (3 Jun 2006)

dodo said:
			
		

> If you keep talking about about a downfall then you  increase the chances of one,



sshhhh!!!! nobody mention the elephant in the corner! It might hear!


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## Michael (3 Jun 2006)

> unemployment now means nothing in ten years time.
> -young population has added to problem due to swelling demand for houses,if prices dive and unemployment rockets then young will be first to leave.
> -Population is expanding mainly due to construction and consumer spending related jobs,these people will be first to leave in any recesssion/downturn and that will rapidly reduce demand in economy from them for good services and housing.
> -regulatory environment may be good but some commentators have said too lax in financial services, other jurisdictions are becoming more business friendly in regulatory stakes.
> ...


 
Bearishbull, how can you sleep at night thinking about the "dangerous housing market". So many people are building up equity its now becoming dangerous, hmmm.  Its a much better life enjoying the present boom than finding the bad in the positive factors aswell. There are all kinds of possibilities in 10 years time, but right now we are booming and some of us are enjoying the ride. I suppose it all makes for a healthy debate.


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## OilKing (3 Jun 2006)

Berni said:
			
		

> It will play in RealPlayer, you can download it here http://uk.real.com/player/?&src=google_ppc_realmusic_nonuk_player,ZG.uk.rm.rm.hd.def - the free version on the right is all you need


 
Thanks Berni. Much obliged!!!


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## bearishbull (3 Jun 2006)

Michael said:
			
		

> Bearishbull, how can you sleep at night thinking about the "dangerous housing market". So many people are building up equity its now becoming dangerous, hmmm. Its a much better life enjoying the present boom than finding the bad in the positive factors aswell. There are all kinds of possibilities in 10 years time, but right now we are booming and some of us are enjoying the ride. I suppose it all makes for a healthy debate.


im just saying dont bury your head in the sand ,we have had a great 15 years economically but theres lots of things on the horizon that suggest the next 15+ will not be so great,as george lee said while economy has boomed for last 5 years exports which are the  life blood of the economy havent and are close to stagnant lately,i actually believe much of europe will suffer for next 15+ years too so its not just ireland but we are more open than other economies and more intricately tied to america. We arent special in this country and our time in the sun WILL come to an end and i'll be ready and will be prepared to head to foreign shores.the uk could yet again be an attractive option for many irish professionals.


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## CGorman (3 Jun 2006)

I thought the programme was worth watching - nothing new, but still a decent quick recap. Personally I think George Lee is an eternal pessimist... but we need people like that at the moment in this country to dampen the crazy enthusiasim abounding in our society.

I came accross this shocking table today: [broken link removed]

If it is correct... it means Irelands external debt of $1trn is *greater* than that of Russia, Brazil, China, Mexico and India *combined*! So 4 million  of us paddys have managed to borrow more than 2.9 _billion_ people abroad! A nation gone mad? At least we are not in the U.S.'s  unenviable position with almost $9trn external debt....

I hope all that money is'nt just being poured into concrete in Dublin's exploding computer belt...


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## whizzbang (4 Jun 2006)

CGorman said:
			
		

> If it is correct... it means Irelands external debt of $1trn is *greater* than that of Russia, Brazil, China, Mexico and India *combined*! So 4 million  of us paddys have managed to borrow more than 2.9 _billion_ people abroad! A nation gone mad? At least we are not in the U.S.'s  unenviable position with almost $9trn external debt....



That was the 2005 number, I think personal debt has gone up another 15 or 20% since then hasn't it? Not sure if this effects this "External debt" though.


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## sonar (5 Jun 2006)

Interest rates heading up and now disturbing warnings about Bank of Ireland's *dangerous addiction to property.*


Also when I see media articles talking down shares I suspect it means
some wealthy and influential people have already moved into short positions on the shares. Party on or party ending ?


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## Guest107 (5 Jun 2006)

sonar said:
			
		

> Also when I see media articles talking down shares I suspect it means
> some wealthy and influential people have already moved into short positions on the shares. Party on or party ending ?



Reading that article it seems the short positions date back to early this year.

I concur  . How does IIB look ?


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## joe sod (5 Jun 2006)

I watched the show on the web. He did a great analysis of the irish economy the best Ive seen. He explained it with such clarity. The governments decision to grant RTE a big increase in licence fee a few years ago is coming back to bite them in the butt now. The way he distinguished between the early celtic tiger and that after 2001 was brilliant and then ending the show with the statement that the celtic tiger is dead it has been dead since 2001. 2001 was definitely an important year because it looked for a couple of months like the boom was finished but most people then forgot about it little realising that important changes had occured. Another startling statistic was that 2/3 of new jobs for men were in construction and for women in the public service. This is more of an echo of the old ireland with the farmer marrying the nurse or teacher, of course the farmer now is replaced by the builder. The 90s were definitely a different decade to now, what we have now resembles the 70s with bloated public service but with subsidised farmers then being replaced by subsidised builders now, and subsidised public servants becoming even more subsidised.


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## dodo (8 Jun 2006)

I wonder how many houses  George has and when did he sell them all, l the  interest rates for the next 18 months are already built into the  house prices


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## gearoidmm (8 Jun 2006)

dodo said:
			
		

> I wonder how many houses George has and when did he sell them all, l the interest rates for the next 18 months are already built into the house prices


 
I think that you are underestimating the ignorance of Irish people when it comes to such matters.  For most, the first inkling they get that rates might be rising is when their repayments go up.  Yes, this rate rise has been particularly well signalled in the media but it means little to the average punter.

On a recent episode of Tubridy tonight, not one single member of the audience knew what the ECB interest rate was when asked.

When you say that the interest rate rises are already built in to prices, are you suggesting that without this, prices might have gone up even faster than the 12% they have risen in the last 12 months?  I think the degree of capital appreciation in the last 6 months in particular makes it likely that future interest rate rises were the last thing on people's minds when buying.


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## Guest107 (8 Jun 2006)

gearoidmm said:
			
		

> On a recent episode of Tubridy tonight, not one single member of the audience knew what the ECB interest rate was when asked.


 That sez a lot about the intelligence of the Tubridy demographic. I'd say half of Podge n Rodges audience woulda known what the ECB rate was.

I'll wager that some of this is down to people doing 'the wrong calculation'. 

Look at the differentials between a 20 year mortgage and a 35 year mortgage....most of the higher risk recent borrowers had to get a long mortgage to 'balance' the books with the bank. 

€250k loan. 
Todays mortgage interest rate (say) 3.5%. 
5% by end 2006 early 2007.   
6% by the top of tightening cycle in 2007/2008 (maybe more) 

date from 

http://www.jeacle.ie/mortgage/ie

20 Year . Tightening implications 

€1449 @ 3.5% 
€1650 @ 5.0%
€1791 @ 6.0%  

A *€342 Rise* in Monthly repayments and *23.5% *higher payments at the end of the tightening cycle 

35 Year . Tightening implications 

€1033 @ 3.5% 
€1261 @ 5.0% 
€1425 @ 6.0%

A *€392 Rise *in Monthly repayments and *38%* higher payments at the end of the tightening cycle 

One can surmise quite easily  that those who can least afford it will take a greater marginal hit. Maybe Tubridys demographic _simply don't want to know _, can't blame the poor dears  . If they could afford to go out they would not be on Tubridy


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## Resident (8 Jun 2006)

and one of the papers recently told of how a lot of big mortgages (1M+) were now completely interest only.
see how they could be hit, even at 250k:

@3.5 729
@5.0 1041
@6.0 1250
Rise: 521
% Rise: 71%


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## bearishbull (17 Jun 2006)

*And so the inevitable slowdown/decline in exports begins while we continue to make other countries rich by increasing our imports of cars clothes electronics etc.*
*Irish Times*
*Sharp fall in exports to hit Ireland's GNP 

*Last updated: 16-06-06, 12:48 
Ireland's trade position deteriorated in April due to a sharp fall in exports which could translate into weaker growth for the economy, new figures show. External trade data for April released by the Central Statistics Office shows that exports dropped 11 per cent in value compared with April 2005, while imports were 8 per cent lower.
Economists blamed the weak export performance on the loss of competitiveness after many years of inflation in wages and other business costs.
In volume terms exports rose only 3 per cent in the first quarter of the year while imports soared 13 per cent due to strong growth in consumer spending and business investment.
According to Rossa White, economist with Davy stockbrokers the weak data will have an negative impact on economic growth.


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## lff12 (19 Jun 2006)

bearishbull said:
			
		

> cant see how anyone can argue with
> -house prices being so far ahead of incomes
> -interest rates rising and unlikely to be this low again for many years/decades
> -our exports being nearly toatally from multinationals who will move on,exports are relatively stagnant and imports of everything rockets
> ...


 
Also house prices are far ahead of rental yields and the ratio is looking decidedly unhealthy.

Marc Coleman (an old pal from TCD) wrote an excellent piece in the Irish Times a few weeks ago which suggested that if you eliminate the increases in Public Sector recruitment (which is also 20k more than was promised as the maximum level) the real unemployment rate should be 6.2%.  He didn't factor in construction, but if you did it would surely raise the rate by another couple of points.  This would suggest to me that unemployment in the main body of the economy is possibly on the rise and is being "hidden" by increases in construction and public sector recruitment.



			
				Neffa said:
			
		

> I really doubt this. Until people actually see falls in price with their own eyes, the mania will continue.


 
Its a bit more than that.  Much of the mania which drives people to buy supposedly overpriced houses is in fact overpriced rents that making buying much more attractive in even the short term.

If you search the ESRI site for an article called "Is the private Rented Sector the real problem?" or something like that it epouses this view.


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## bearishbull (27 Jun 2006)

http://www.rte.ie/business/2006/0627/jobs.html

More jobs leaving the country. Many gone, many more to go.


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## bearishbull (27 Jun 2006)

http://www.finfacts.com/irelandbusinessnews/publish/article_10006332.shtml


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## room305 (28 Jun 2006)

Good post bearishbull, I found this quote particularly scary:



> According to Bank of Ireland Private Banking, the Irish have invested €30 billion (equity and borrowings) in commercial property both in Ireland and overseas, in the past 5 years. In contrast, Enterprise Ireland said last year that under its Seed and Venture Capital Programme, €133m had been invested in 75 companies since 2001. An Irish company has not floated on the Nasdaq Stock Exchange since 1999 and we have a handful of existing Nasdaq member firms compared with Israel’s 70 plus tally.


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## kirian (28 Jun 2006)

room305 said:
			
		

> According to Bank of Ireland Private Banking, the Irish have invested €30 million (equity and borrowings) in commercial property both in Ireland and overseas, in the past 5 years. In contrast, Enterprise Ireland said last year that under its Seed and Venture Capital Programme, €133m had been invested in 75 companies since 2001. An Irish company has not floated on the Nasdaq Stock Exchange since 1999 and we have a handful of existing Nasdaq member firms compared with Israel’s 70 plus tally.:



In the quote above I think the amount invested in commercial property should be €30 billion and not €30 million. This puts the €133m invested in new companies by Enterprise Ireland into perspective.


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## room305 (28 Jun 2006)

Yes it should, I actually read it as €30 billion! In the summary it also gives the figure as billion. It means that in the past five years, the state funded enterprise investment programme, invested less than half a percent of the amount that Irish citizens invested in property during the same period.

EDIT: I edited the original comment to read "billion" rather than "million".


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## colc1 (28 Jun 2006)

redo said:
			
		

> I watched it last night. If we think the FTB are feeling under pressure to buy, imagine what the developers feel, when trying to sell their "Select", "Luxury", "Spacious" way of life. The FTB should not buy anymore. The developers are quaking in their boots.


 
Good point


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