Have we any lessons from the last 10 years

S

simplyjoe

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I am worried that the main problems encountered in the boom and post boom have not been addressed.

Due to our human instinct to blame someone else most people have not looked at their behaviour during and after the Celtic Tiger era. The issues of over optimistic expectations, poor credit control, poor cost control, no savings, poor staff management, too high personal drawings and standard of living, no strategic planning and many more matters need to be corrected so that any future growth will be better handled.

These issues need to be tackled by both the Government and individuals or private enterprises.

Is there any strategy being planned so that future entrepreneurs/business people will be better educated or prepared?

I would also say that these poor practices were in the main encouraged by the example given by our government and the way they handled our affairs.
 
I think one thing the generation who grew up in the Celtic Tiger era and knew no different have learnt over the last 2 years is that life is not always easy. That might be no harm in the long run
 
I find it shocking that the government has still not put in legislation to stop the banks recklessly lending in the exact same manner as they have during the bubble. There's absolutely nothing to stop them doing it again, then put their hand out for money shamelessly when the proverbial hits the fan another 10 or 15 years down the line.
 
There was a TV programme on from the States earlier in the week about families who are now homeless and living in tent cities due to job loss and business failure.

When asked what they would have done differently, they all said save.

Too many people were spending their incomes and more by using credit cards and loans to prop up their lifestyles.

Only those who have savings to see them through the recession will survive.
 
We went from a society that was starved of credit to one where anybody got it. I remember working in the US as a waiter in the early 90's and was amazed at the cars some of the people I worked with drove as allot were college students. I was amazed banks would give them loans as in Ireland at that time people with full time jobs could barely get a loan.
When credit became freely available here people gobbled it as some sort of a reaction to the previous meanness of the banks. Others simply followed what they saw others doing. That said I know ordinary people who never bought into it, as Ben Dunne said on tonight’s Late Late show the banks were telling him for 10k they give him a 100k loan. He knew it was not right and so did a lot of people in fairness.
There is some argument for borrowing working capital within the means of the business it's used for, but people borrowing for holidays or even new cars every year was incredible and stupid. People have to take responsibility for themselves and what they put their signature on and have NO one else to blame in my mind. I know banks were giving loans the hard sell but I don’t understand how people felt compelled to buy and somehow that’s the banks fault. I do believe that a huge number of people don’t actually basically understand financial products, compound interest, how term/car loans work or even mortgages not to mentions different insurance. They just trust what they were told by someone who SELLS the stuff. Does that make the seller dishonest or the buyer (an adult) an idiot? Most people don’t realise that to buy a car you BUY a loan first. There is a chasm in the thinking process and responsibility needed in buying such products and the thinking of allot of buyers, namely been blinded by the new car, house or TV, Sofa, holiday etc.
This should be drilled in at secondary schools before the Credit card takes the mindset. There should be night course's in this stuff and how to understand financial products and more so how to recognise better deals for your needs. How to define your needs properly with objective criteria.
Banks definitely should be better marshalled in how they sell products. There is regulation but we need it to be better policed. We are great in Ireland for legislation but poor at seeing it supported with seeing it administered. Now we are gone back to the banks starving us of credit which is also wrong. Banks sold investment products to people without the customer’s best interest in mind. The bonus culture created this. But no bank forced or codded a person into buying a housed. The only person I remember saying wait a minute was David McWilliam so no one has a moral high ground on that, but still adults made their own decision with some deciding not to buy it should be remembered.
I even heard a public servant using that fact they bought a house in 2006 as a justifiable reason why they cant take pay cuts.. It was their decision and no one else’s and the rest of the country should not be indebted because of it.
 
Ceatharlach said:
I even heard a public servant using that fact they bought a house in 2006 as a justifiable reason why they cant take pay cuts.. It was their decision and no one else’s and the rest of the country should not be indebted because of it.
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Yes and No - personal responsibility does indeed come into it. However, you have to remember the context. Banks throwing money around like there was no tomorrow, property prices steadily increasing for 15+ years, so there was a whole generation of adults who had never experienced anything other than price increases. Strong economic growth fuelling demand.

For anyone considering buying their first property in 05/06, there was the substantial risk of being 'left behind' and losing the chance to ever own their own property. It is easy to be clever with hindsight.
 
Ceatharlach said:
I even heard a public servant using that fact they bought a house in 2006 as a justifiable reason why they cant take pay cuts.. It was their decision and no one else’s and the rest of the country should not be indebted because of it.
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I agree with everything else you said except this.
The reason being if you went to get a mortgage it was based on your salary and your ability to repay based on that salary.
If people are having salary reductions and this affects their ability to repay their mortgage, I would have some sympathy for them.
Not sure why you brought up the example of a public servant, surely this applies to private sector also.
 

In fairness I know nothing about economics but because I'm have some sort of brain I could see paying 10 times the average salary for a tiny ex-council house made no sense and suggested something was wrong. So instead of taking a gamble I went with my instincts and started researching property bubbles and found out instantly we were in the middle of the mother of all bubbles.

I think the elephant in the room is the fact that most people aren't particularly intelligent, so trusting them to have personal responsibility or do any sort of research isn't realistic. So the only solution is extremely tough regulation of the banking industry.
 
When I went to visit my uncle in the states back in May, he asked how things were back home. When I told him about the economy he said " I knew something was seriously ****ed up over there when a house on Melvin Road in Crumlin was going for $750,000" I think that sums it up.
 

Individuals are smart, people are stupid
 
Lesson 1: Don't treat a windfall as regular income - this is why we have a huge deficit.
Lesson 2: Res mortgage lending multiples should be set by the central bank.
Lesson 3: Global property markets are now correlated so find other ways of diversifying.
Lesson 4: A country's stock market can fall across all sectors.
Lesson 5: We are not as smart or as rich or as different as we thought we were.
Lesson 6: Trade unionism has become anachronistic, destructive and self-serving.
Lesson 7: The building industry always does better under Fianna Fáil
 

What you are effectively saying is that all our taxes that go towards eduction have failed do adequately educate the public on things economic and finance. Instead of fixing THIS problem let's spend more money to create more regulations set by the same people that do not succeed in the education field.

All that will happen with new or stricter regulation is that it will make it more difficult or impossible for competition to enter the market, and especially for new banks to be created. Why do you think banks are only complaining about regulations in executive pay and no others? The more regulation there is the more dificult it is for new competition to arise.
Most people now understand that banks' behaviour was one of many factors that caused the crisis. Even if some of us could get funds together to start up a new bank with 'moral' lending practices, it would be financially prohibitive, if not impossible, due to all the regulations.

The main reason nothing will change in the future is because of the corporatist/interventionist economic system, where certain companies and industries are assigned the nonsense charateristic of 'systemic importance' by politicians. And direct government actions, through bailouts, guarantees, stimuli, etc. are taking away the hugley important loss part of the profit AND loss system. If banks hadn't been bailed out they would never make the same mistakes again.
 

+1
 
Carolina said:
Lesson 2: Res mortgage lending multiples should be set by the central bank.
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Yes. I would go further.
  • Restrict the term to 25yrs max. Ban mortgages beyond 25 yrs.
  • Legislate for max 90% LTV mortgages.
  • Maybe even legislate / regulate the income - mortgage multiple??
Can anybody see any problems with these proposals?

It would mean that house prices would have to fall to make them affordable to people.
 

Also ban interest-only and multi-generational mortgages while we're at it. All ridiculous ploys by vested interests to get people to pay sums of money they can't afford in the first place.
 

This has happened before and will happen again. Children today will grow up with little or no memory of the present and will repeat the same mistakes in 20/30 years time. It's simply human nature.
 
oulguy said:
This has happened before and will happen again. Children today will grow up with little or no memory of the present and will repeat the same mistakes in 20/30 years time. It's simply human nature.
Click to expand...

Yep, the only thing we learn from history is that we learn nothing from history.
 
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