George Lee's Boom-Discuss here

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,
 
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.
 
dodo said:
If you keep talking about about a downfall then you increase the chances of one,
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sshhhh!!!! nobody mention the elephant in the corner! It might hear!
 
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 .
Today 10:12 AM
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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.
 
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.
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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.
 
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...
 
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....
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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.
 
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 ?
 
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 ?
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Reading that article it seems the short positions date back to early this year.

I concur :D . How does IIB look ?
 
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.
 
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
 
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
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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.
 
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.
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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 :D
 
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% :eek:
 
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.
 
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
-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
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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.
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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.
 
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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