N
bearishbull said:p.s it says he interested in a 750million stake when he;s worth 1.3 billion. no billionaire investor is gonna stick half his money into one share in a small exposed market. i reckon the Bank of ireland part of the story is nonsense ,he probably was bragging to the people in the old country how well he ahd done in america and could theoretically buy a chunk of the bank of ireland.
walk2dewater said:Well spotted Loki. If the net revenue from your property divided by the market value of the property is less than inflation then you are receiving a negative real return. In plain English: Your net worth is decreasing. That's why my capital is elsewhere.
Duplex said:Much of the mortgage risk is repackaged by the banks and sold on the money markets as mortgage backed securities. Still a slight contradiction depends when and at what price he buys I guess.
dam099 said:Thats not true. Revenue is only part of the return there is also capital appreciation. If your property's market value is increasing in line with inflation then your net worth is not decreasing.
Of course many investors are making the assumption that prices will always increase and knowingly buying properties on which they will make rental losses even at todays low rates based on that expectation of price increases which might not be the wisest move.
Neffa said:From Breakingnews.ie this morning:
http://www.breakingnews.ie/2006/03/22/story250432.html
Warning about debt and rising interest rates
22/03/2006 - 09:19:28
The Money Advice and Budgeting Service has reportedly warned that many people could find themselves struggling to make ends meet in the event of further interest-rate rises.
Reports this morning said a significant number of people seeking help from the service were earning more than the average industrial wage of €30,000.
Some of these people are reportedly being forced to cut back on food and heat because they are struggling with repayments on mortgages and personal loans.
The Central Bank has been warning for several months about the high levels of debt in Ireland and the effect this could have in the event of an economic slowdown.
This morning's reports said the MABS was now warning that expected increases in interest rates during the rest of this year could leave many people unable to meet their day-to-day living expenses.
Neffa said:Warning about debt and rising interest rates
22/03/2006 - 09:19:28
The Money Advice and Budgeting Service has reportedly warned that many people could find themselves struggling to make ends meet in the event of further interest-rate rises.
Reports this morning said a significant number of people seeking help from the service were earning more than the average industrial wage of €30,000.
Some of these people are reportedly being forced to cut back on food and heat because they are struggling with repayments on mortgages and personal loans.
The Central Bank has been warning for several months about the high levels of debt in Ireland and the effect this could have in the event of an economic slowdown.
This morning's reports said the MABS was now warning that expected increases in interest rates during the rest of this year could leave many people unable to meet their day-to-day living expenses.
The Irish Times said:Warning against 'irrational exuberance' in property
The Irish economy is overly dependent on the housing sector and the Government should act to quell growing signs of irrational exuberance among consumers, a leading economist warned today.
In his latest quarterly outlook, Friends First economist Jim Power said that while the economy on track for another strong performance in 2006, a correction in house prices would severely damage consumer confidence and would undermine the overall economy.
"There is no doubt that the economy is performing strongly, but this performance is over reliant on the housing market which is exerting an inordinate influence on the overall health of the Irish economy," warned Mr Power.
Mr Power said Irish consumers' "incredible willingness to borrow" is being fuelled by rising salaries, the prospect of maturing SSIA funds and low income taxes.
Echoing the phrase made famous by Alan Greenspan before the dot.com crash Mr Power warned that "Consumer spending is on fire and there is strong evidence of irrational exuberance.
"Against this background it is not surprising that inflationary pressures are starting to re-emerge and it would now be prudent for Government to tighten fiscal policy. However the political cycle militates against this," said Mr Power.
Mr Power explained that the lopsided growth in favour of the construction sector has made the economy vulnerable to any downturn which could be triggered by a sharp hike in interest rates.
In the final quarter of 2005 construction activity accounted for 12.7 per cent of total employment. Total output from the sector was valued at €30 billion in 2005 or 19 per cent of GDP.
The size of the mortgage market has grown from under €25 billion in 2000 to €100 billion in January 2006, this has contributed to strong growth in financial services sector employment.
"Many house purchasers are taking on mortgages at the upper end of their comfort zone. Between December 2005 and 2006, interest rates are likely to increase by 1 per cent.
According to Mr Power, a large number of the companies quoted on the Irish stock exchange are also heavily influenced by and dependent on the health of the housing market and housing related activities. These include; AIB, Bank of Ireland, Anglo Irish Bank, Irish Life and Permanent, Grafton Group, Abbey, IFG Group, Kingspan Group, McInerney Holdings, Readymix and to an extent CRH.
Any serious setback for the Irish housing market would have a significant negative knock-on effect for these companies and consequently for Irish pension funds and private equity holdings.
"Our policy makers need to ensure that a sustainable indigenous economy is created alongside the housing sector and the public sector. An economy cannot grow on the basis of the public sector and the housing market indefinitely," warned Mr Power.
© 2006 ireland.com
bearishbull said:theres very little statistics in the MABS story,i'd say for now its laregly anecdotal but if theres increased levels in statisitcis i'd be concerned. people do think things will stay rosey for a long long time but we all know economies dont work like this.i'd like to see a macro model of 4% base rates ,a slowdown in america and oil consisitantly over 60dollars .foriegn firms based in ireland account for nearly 90% of our exports,when even a chunk of them decide to move on to cheaper cost bases then we're fecked.
There's a report out today (article posted below) from 'NCB Brokers' basically saying that all will be rosy in the economy for the next 15 years. I took a quick look at their website just to see if they were owned by one of the usual suspects.. but do they do appear to be largely independent.bearishbull said:people do think things will stay rosey for a long long time but we all know economies dont work like this.
The Irish Times said:NCB predicts 15 more years of economic growth
Ireland's burgeoning population of young affluent consumers should ensure that Ireland's economic growth over the next 15 years will be the envy of Europe, according to new research by NCB stockbrokers.
In a major new study titled 2020 Vision, NCB economists Dermot O'Brien and Eunan King point to the demographic dividend which should ensure that demand for houses, cars and services will remain buoyant in the near term.
The Irish baby boom which was later than other countries spans the years between 1971 and 1983 when 900,000 babies were born. This age group which is the biggest single cohort is now entering its period of maximum consumption and will have a major influence on shaping of Irish economic and social policy in the years ahead, according to NCB.
NCB estimates that when immigration is added to the Ireland's high birth rate, Ireland's population will exceed 5.3 million by 2020 with immigrants accounting for 20 per cent of the population.
The next 15 years will be marked by a high levels of consumption which, alone, could amount to 2.75 per cent in GDP growth. However the tide will turn after 2020 with the greying of the baby boom generation and pension costs will take up a greater slice of GDP.
Crucially for the economy, NCB estimates that productivity growth of 4 per cent is possible as higher skilled service workers replace those in manufacturing. However this forecast is based on optimistic assumptions of the widespread use of IT and a flexible labour market.
Immigrant labour will be a central pillar of future growth and NCB's research shows that contrary to common perception most immigrants are employed in high-skilled sectors. The research based on CSO data shows that 65 per cent of immigrants are in high-skilled jobs compared to 60 per cent of the native population yet the majority of immigrants are still working in jobs below their qualifications.
Against such a positive backdrop it is not surprising that NCB expects demand for housing to remain strong though the market should cool from its current levels. NCB expect the housing market to peak at 11 per cent this year before falling to 6 per cent in 2007 and landing softly on low single digits thereafter.
Some economists have been puzzled by the apparent conundrum between surging employment growth, which has overtaken overall economic growth, implying a fall in productivity.
However, Mr O'Brien and Mr King believe that Ireland's growth rates have been underestimated and events in the real economy point to a more robust level of activity than is borne out in the official statistics. NCB believes that the GDP growth figures will be eventually revised upwards to 6 or 6.5 per cent.
soma said:There's a report out today (article posted below) from 'NCB Brokers' basically saying that all will be rosy in the economy for the next 15 years. I took a quick look at their website just to see if they were owned by one of the usual suspects.. but do they do appear to be largely independent.
Now.. let's say we've had 15 years of a economic boom already.. (personally I see the 'real' boom having finished 3-4 years ago and we've just been 'faking it' thru credit since, but I digress..).. and these guys are predicting another 15 years of growth.. that's 30 years straight growth uninterrupted by recession. Is it just me or is that extremely unlikely in a free-market economy..? Has this ever been achieved before..? (Maybe Germany post WWII..?) It just seems remarkably unlikely, at least to me.
daveirl said:Thing I don't get about the immigration thing is that people say x amount of people come in 2005, so then by 2020 the amount of people will be 15*x.
People don't seem to take into account that a substantial amount of the new immigrants won't stay.
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