Future price of Irish properties
- Thread starter bacchus
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ubiquitous
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State aids to individual businesses or industry sectors have been outlawed by the EU ever since the Single European Act came into force in the early 1990's. As a result at least one European government (Belgium, if I remember correctly) has been powerless to stop its own national airline from going bust.
EU competition law now also prohibits governments from using legislation as a means to prop up or protect businesses or industries.
None of this legislative framework was in place when the State rescued AIB from the ICI crisis in the mid 1980s
WTTW
My impression is that the general global rise in interest rates is possibly reactive to some inflationary pressure building in western economies, possibly specifically targeted at asset bubbles.
The move by the Bank of Japan to raise rates for the first time in a decade is, it seems, the most significant piece of news on the money markets in some years. I’ve attached a couple of informative articles, one by Stephen Roach Chief Economist of Morgan Stanley which give some good background as to the likely causes of the Japanese shift in policy.
I’d be keeping my eye on the American housing market which, as you know, has sustained the American economy in the wake of the Dot Com bust in 2000. As the market slows equity release and consumer spending will be hit, I’m afraid I can’t see the US or us escaping unscathed. I still see this tightening, as short term; inflationary pressures are not great (if they were Japan wouldn’t have (effectively) 0% interest rates) nevertheless the banks will want to know that the medicine has worked.
As for investment advice what about a flat in Budapest, they seem to be an excellent hedge against any possible global economic scenario.
http://money.cnn.com/2006/03/03/news/international/chinasaving_fortune/
[broken link removed]
My impression is that the general global rise in interest rates is possibly reactive to some inflationary pressure building in western economies, possibly specifically targeted at asset bubbles.
The move by the Bank of Japan to raise rates for the first time in a decade is, it seems, the most significant piece of news on the money markets in some years. I’ve attached a couple of informative articles, one by Stephen Roach Chief Economist of Morgan Stanley which give some good background as to the likely causes of the Japanese shift in policy.
I’d be keeping my eye on the American housing market which, as you know, has sustained the American economy in the wake of the Dot Com bust in 2000. As the market slows equity release and consumer spending will be hit, I’m afraid I can’t see the US or us escaping unscathed. I still see this tightening, as short term; inflationary pressures are not great (if they were Japan wouldn’t have (effectively) 0% interest rates) nevertheless the banks will want to know that the medicine has worked.
As for investment advice what about a flat in Budapest, they seem to be an excellent hedge against any possible global economic scenario.
http://money.cnn.com/2006/03/03/news/international/chinasaving_fortune/
[broken link removed]
beattie said:
I guess they would like to keep them within a certain range of the FED rate. If the FED rate continues to rise but the ECB rate doesn't then this makes the Dollar a more attractive investment than the Euro and affects the exchange rate between the two currencies which would have a knock-on affect on imports and exports and the Eurozone economy.
Interesting article from The Guardian last week on the ECB and FED's different approach on raising interest rates...
http://business.guardian.co.uk/notebook/story/0,,1721263,00.html
W
walk2dewater
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ivuernis said:
Sentiment hangs on interest rate EXPECTATIONS, not rates per se. Currently we're at "they won't go higher than 4%" stage. Imagine the effect when we switch to "they're going to 4% earlier than we thought, they're aint stopping there, and the hikes are getting more frequent". How many nouveau landlords with under water 'investments' are going to get cold feet then?
bearishbull
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yes inflation would be affected by a weaker euro which would occur if rates were much lower than usa.the ecb's primary objective is to control inflation even at expense of higher growth.ivuernis said:
A caveat this is a very much a humble opinion.
The principle concern and remit of the ECB is price stability, so I assume that they will address interest rate policy with the aim of maintaining inflation/deflation within their target range.
I don’t think that the money markets would be massively surprised if the Fed went to 5% the question is are they targeting signs of inflation in the broader economy (no in my opinion, incomes growth is pitiful in the US) or are the Fed looking at the housing bubble, (I know asset bubbles are ‘supposed’ to be outside their remit btw). The dollar yield curve remains inverted, the Euro curve has risen, but nothing drastic seems apparent on the horizon.
It may be the case that the actions of the Bank of Japan will eventually push Euro rates beyond 3.5 to 4% but that would be an absolute maximum in a global deflationary environment IMHO. The general consensus seems to be that the liquidity party is over (and just when everyone was starting to have fun).
Interest rates and bond rates are intriguing (believe me) but that is because they are transparent quantifiable figures with nice graphs etc. The Big Daddy of global economics is what the British call the Trade Cycle and the Americans the Business Cycle. Economic history is a tale of growth followed by retraction.
Sometimes (foolishly) I get the impression that governments and central bankers would like to give the impression that they have somehow mastered the cyclical swings of growth and decline, but of course they haven’t. I see interest rate policy as reactive, behind the curve. It’s what interest rates are reacting too that’s important.
http://www.bloomberg.com/markets/rates/germany.html
I’ve attached the Bloomberg Rate and Bonds data which makes for interesting reading.
The principle concern and remit of the ECB is price stability, so I assume that they will address interest rate policy with the aim of maintaining inflation/deflation within their target range.
I don’t think that the money markets would be massively surprised if the Fed went to 5% the question is are they targeting signs of inflation in the broader economy (no in my opinion, incomes growth is pitiful in the US) or are the Fed looking at the housing bubble, (I know asset bubbles are ‘supposed’ to be outside their remit btw). The dollar yield curve remains inverted, the Euro curve has risen, but nothing drastic seems apparent on the horizon.
It may be the case that the actions of the Bank of Japan will eventually push Euro rates beyond 3.5 to 4% but that would be an absolute maximum in a global deflationary environment IMHO. The general consensus seems to be that the liquidity party is over (and just when everyone was starting to have fun).
Interest rates and bond rates are intriguing (believe me) but that is because they are transparent quantifiable figures with nice graphs etc. The Big Daddy of global economics is what the British call the Trade Cycle and the Americans the Business Cycle. Economic history is a tale of growth followed by retraction.
Sometimes (foolishly) I get the impression that governments and central bankers would like to give the impression that they have somehow mastered the cyclical swings of growth and decline, but of course they haven’t. I see interest rate policy as reactive, behind the curve. It’s what interest rates are reacting too that’s important.
http://www.bloomberg.com/markets/rates/germany.html
I’ve attached the Bloomberg Rate and Bonds data which makes for interesting reading.
Weren't the other crashes at least partially caused by attempts by banks to control the market? Of course it can be argued that what happens in the american market would effect here but the topic is Irish Property Prices. Instead of debating that why aren't people saying if the crash happens in the US the effect will be what here?Duplex said:
The ECB actions maybe a bit more important to us. Of course it still can't be called a bubble untill it sharply falls but many people like to exagerate. I noticed recently that reporters now say "exhibits signs of a bubble". I would put this down to the fact they know it isn't a bubble by definition unless a crash happens
Loki said:
Obviously the ECB's actions are more directly important to us here in Ireland than the Fed's actions, but it's the Fed's aggressive interest rate hikes of late that are having some affect on the ECB decision to put up rates aswell, thus affecting us indirectly.
SO lets get this straight Issac Newton admitted he could not predict what would happen in a market and people here keep claiming they can!Duplex said:
i
vuernis
You still can't call (and be correct) it a bubble untill after a crash as it isn't a bubble till that happens. The fact there is no longer a bubble at that point means nothing.
People can't agree on where the bubble started so effectively people mean high prices that they beleive will be proved to be a bubble. To a certain extent it is a bit like saying the hare will win the race not the dogs.
gearoidmm said:
As the main remit of the ECB is to curb inflation then I think the trend for the eurozone will be higher interest rates (how much and how fast is open to debate) even without the added Japanese and US interest rate rises because medium and long term trends for energy prices are upwards and this is going to fuel (no pun intended) inflation.
There may be a short-term drop in certain energy prices but the medium and long term energy prices can only keep pushing inflation upwards which may necessitate further interest rate increases. Even if rising energy prices don't lead to higher interest rates they will hit people in the pocket thus putting a curb on spending especially those in the car-dependent commuter belts.
gearoidmm said:
I know. And I know I complained about it previously too, but this time I couldn't let it go... sorry!
It isn't semantics because to say it is a bubble is a claim of actual events. It has a definition which requires certain events to happen. If you were to say an explosion just happened when somebody lput a fire work on the table you would be eithergearoidmm said:
a) Lying
b) Wrong
Not a matter of semantics as people aren't arguing the meaning of the word they are claiming it has happened which it hasn't
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Neffa
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There was a supplement with the Irish Times yesterday with a commentary from HOK on residential and commercial prices.
One of the things which really threw me was that they claim that for the average purchase in Ireland for residential, only 65% is actually borrowed. This seems incredibly low to me - if it were true, then the risk of negative equity in the event of a correction would be much lower.
Can anyone explain/back this up? Is it equity withdrawal funding investment purchases being counted as "deposit" money? Or are large deposits common and not reported much?
....and I'm not getting drawn into the semantics debate again.....!
One of the things which really threw me was that they claim that for the average purchase in Ireland for residential, only 65% is actually borrowed. This seems incredibly low to me - if it were true, then the risk of negative equity in the event of a correction would be much lower.
Can anyone explain/back this up? Is it equity withdrawal funding investment purchases being counted as "deposit" money? Or are large deposits common and not reported much?
....and I'm not getting drawn into the semantics debate again.....!
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