Threats to economy from interest rates and property


One effect is that, since oil is priced in dollars, the inflationary effect of rising oil prices may not fully feed through. Exports, to america, will suffer but if that's not your market then it's actually beneficial.
 
Exports, to america, will suffer but if that's not your market then it's actually beneficial
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And anyone who supplies US multinationals (or works for them) will suffer since they cost everything in dollars.
 
strong euro relative to dollar isnt necessarily a bad thing,if us multinationals are selling in euro's then the price they get for their goods will rise in dollar terms.
 
"Re the Symantec tax isssue, there is a strong possbility they will beat the IRS claim, or if not beat it at least substantially reduce the liability to a a few hundred million. The IRS are basically chancing their arm on this, in the hope that they will get something out of it, or at worst scare a few firms into recognising more taxable revenue in the states. If a transfer price can be shown to be economically justifiable there should be very little they can do."

Im not so sure, i think there is a big change of sentiment by the IRS. The american government needs alot more money to support its spending. Also what Symantec is at is really hurting the american balance of payments. Effectively it is licensing an irish subsidiary to sell american technology in europe as if it were an irish export but the actual technology is developed by its american operation. So basically other countries like ireland and china etc are reaping the benefits by boosting their own balance of payments and government revenue. So I think in future the IRS is going to make it very difficult for multinationals to continue this practice.
 

Agreed, the political climate in the US is becoming ever more hawkish, look at the immigration issue, both Republican and Democratic parties are trying to outdo each other and the IRS will probably feel emboldened to go after some companies like Symantec.
 
The problem is that the IRS will have to prove that the initial transfers were at levels which would indicate that the transactions were not at arms length, this will be difficult to prove because it is subjective, in addition, one imagines that Symantec had and will continue to have the benefit of top notch legal advice on their transfer pricing structure. I agree that this is something the US are trying to clamp down on, but in my opinion that will require new legislation (presuming that Symantec did indeed have expert advice initially), for me this is more like a warning shot across the bows, Symantec will pay a few hundred and all parties will be satisfied. Maybe the simplest way forward is for the US to reduce CT rates??
 
My neighbour sold his house(3 bed terraced house in glasnevin) this week and he got a figure which is 40% more than a identical neighbouring house got in Jan 05. thats around 25% per annum inflation , is anyone else seeing these increases around dublin? i gather apartments are'nt rising by anywhere near as much. This really is madness with interest rates rising, incomes only growing by 4-5% and prices rising from already very high levels. im getting more and more worried about how this boom is gonna end,if there truly was a large shortage of housing why are rents lower in real terms than they were 5 years ago and not rising by more than general inflation!
 
I agree,house price inflation is now out of control.If it continues at this rate i can see the crash within 12months.
 
That is an incredile appreciation of an already overvalued asset IMO, any sensible government would do something about it before it spirals out of control.....
 
It is starting to feed on itself now. 25% increases will only encourage more people to buy now
 
redo said:
Scrap stamp duty on houses. It may drive up ASKING prices but should increase supply
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This post will be deleted if not edited immediately H.. that would make things worse. Do you not remember what happened when the FTB stamp duty reductions came in..? Every shed in dublin overnight shot up to 317k.

What would help IMO is a US-Style annual property tax based on appraised value and/or a tax on second properties and/or higher capital gains tax on investment properties. However any of these measures are extremely unlikely to happen as the government would be slaughtered in the next election if they did this.
 
soma said:
However any of these measures are extremely unlikely to happen as the government would be slaughtered in the next election if they did this.
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I think they are just hoping it all holds together until after the elections in 2007 then they may do something about it. If it crashes before then they are fecked and they know it.
 
whizzbang said:
I think they are just hoping it all holds together until after the elections in 2007 then they may do something about it. If it crashes before then they are fecked and they know it.
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Why would they be fecked? The govt, in reality, has little or no influence on what investments people make in their private lives. I stubbed my toe on the bed post this morning, I didn't blame Bertie for my own carelessness.

It would be an incredibly childish attitude for someone who enters into a very serious financial arrangement to then blame the govt for their own fiscal ineptitude if things went wrong.
 

I think if people get into serious negative equity they will look for someone to blame. People will say the governement shuld have prevented the crash happening or they will blame something the government did for causing the crash. Either that or they will blame the government for not bailing them out.

In any event I find it hard to believe that the great masses will accept it is their own fault. People are smart, crowds are stupid.
 
whizzbang said:
I think if people get into serious negative equity they will look for someone to blame. People will say the governement shuld have prevented the crash happening or they will blame something the government did for causing the crash.
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Its all pot luck investing in property at the end of the day though by keeping CGT so low they are keeping prices up I think in the UK its 40% someone correct if I am wrong please
 
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