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 How far have we come?

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PostSubject: How far have we come?   Wed Mar 11, 2009 6:04 pm

I don't have much time so I'll keep this brief. I remember watching on P.ie an old FF election ad video, can't remember which election but it was a few years ago. It was all different people talking about why they would vote FF. Lots of different reasons but one now sticks out, on reflection: the kid saying that he supported FF because his parents said he would never have to live through a recession. This was a common theme during the Tiger. The Celtic Tiger generation was thought to be the first in the history of the Republic (and the Free State for that matter) which wouldn't have to live through a recession or depression or some kind of glum period of economic woe. Our troubles were behind us; we had moved on from all that hardship malarky; this was the new Ireland. Fast forward a few thousand days and that myth has been utterly shattered. We are reminded that there is no such thing as leaving economic hardship behind, and that no generation can escape some degree of it.

The other point is the trouble up North. Now obviously I don't want to say much about this as it's early days and the response amongst the main parties seems to be positive, but the threat is there and everybody knows it; that if this keeps up and there are reprisals it could spark a fresh new cycle of violence. The Troubles, similarly, were viewed as a thing of the past which newer generations would never have to experience. Today's Guardian hits on this point excellently (I really should buy it more often). It talks about the "Good Friday generation" - an excellent supplement to the term "Celtic Tiger generation". The Guardian talks about how members of this Good Friday generation now fear a return to the gun, which they have hitherto only experience vicariously, through the stories of their parents. Similarly, the Celtic Tiger generation has hitherto only expericenced national economic hardship vicariously.

It now seems that there is a real threat of this vicarious experience of horrors past becoming a real and present horror. The terms "Good Friday generation" and "Celtic Tiger generation" risk losing all meaning, leaving the present generation as just the next one to experience to bitter cycle of hardship we all thought and hoped we had left behind.

Economically and politically, North and South: what has changed? How far have we really come?


Last edited by evercloserunion on Wed Mar 11, 2009 8:41 pm; edited 1 time in total
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PostSubject: Re: How far have we come?   Wed Mar 11, 2009 6:38 pm

Very interesting post evercloserunion: I don't want to rush a reply as it deserves some time to sink in.
Just some first thoughts:
Quote :
he would never have to live through a recession
...
Was the "never again will we be poor" feeling something unique to Ireland? Is it something to do with "never before" having before experienced a major boom and its aftermath of crash? Other economies have gone through the spasms of the boom/slump cycle before whereas in Ireland the legacy of colonialism meant that this was our first real boom since the end of the 18th century. When the sun shines for two days in a row, I always start thinking that permanent good weather has arrived. Its a human thing.

We will have slumps as long as we have capitalism: it has inherent instabilities. This one is a very serious one, and as someone who grew up before the onset of full employment, I have wondered how younger people will cope. My hope is that they will not accept the slump and will question it and resist it to the core.

Quote :
The Troubles, similarly, were viewed as a thing of the past which newer generations would never have to experience
Was that so unreasonable a hope or expectation?

Quote :
no generation can escape some degree of it
I wouldn't be of the view that there is an inevitability to it.

There are still big unresolved issues in relation to the North, but there is imo no unavoidable need to be killing each other over them.
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PostSubject: Re: How far have we come?   Wed Mar 11, 2009 6:44 pm

Quote :
Was that so unreasonable a hope or expectation?

I wouldn't be of the view that there is an inevitability to it.

There are still big unresolved issues in relation to the North, but there is imo no unavoidable need to be killing each other over them.
True cactus. But I am talking about this view that, if ever there was a generation which would see all this left behind, it was this one. Now that ship seems to have sailed. Will we be so optimistic for the next generation? Will we be telling our children that never again will they have to see an economic crisis, or a terrorist campaign in the North, as we did?
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PostSubject: Re: How far have we come?   Wed Mar 11, 2009 6:50 pm

I think the North is utterly changed - a couple of chaps pulling a gun on unprepared people does not mean Derry 1968. The sight of Martin McGuinness, Peter Robinson, and Hugh Orde giving a joint press statement yesterday, plus Sinn Fein's Tom Hartley being met by Loyalists this morning, is proof of that. The North is in a different place now.

The Republic - well that's a different story. CBS News had a piece last week more or less saying that Ireland had now returned to 'normal', the bubble being a blip caused by recklessness, croneyism, and profligacy. I think the 'returning to the 80s' thing is over the top, we have a much better standard of living generally now than that sh1tty decade. But the unemployment is back, and mass emigration would be too if it weren't for the fact that this time the rest of the world is down too. It's worse now in one way though - our reputation abroad is on the floor, the goodwill we might have had back then is gone. Croneyism and corruption, the 'it's not what you know' thing, has severely knocked our image. McWilliams was on about it last week when he told of how investment types he was talking to in New York were saying that they would never go to Ireland again, the cosy relationship between politicians, officials, and certain financial and business figures meant a slanted playing field before they had even started. The croneyism of the last decade has thus cost us much inward investment that we are going to badly need to re-start the economy here. For that, in my view, certain politicians and businessmen should be in prison.
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PostSubject: Re: How far have we come?   Wed Mar 11, 2009 7:08 pm

evercloserunion wrote:
Quote :
Was that so unreasonable a hope or expectation?

I wouldn't be of the view that there is an inevitability to it.

There are still big unresolved issues in relation to the North, but there is imo no unavoidable need to be killing each other over them.
True cactus. But I am talking about this view that, if ever there was a generation which would see all this left behind, it was this one. Now that ship seems to have sailed. Will we be so optimistic for the next generation? Will we be telling our children that never again will they have to see an economic crisis, or a terrorist campaign in the North, as we did?

Not ignoring Toxics points, with which I agree, but I think the economic crash was unavoidable: it came out of an inherent build up of contradictions within the boom - this led to increased costs, squeezed profit margins, oversupply of housing and excess of capital looking for profit. The political character of the Government made it inevitable that the crisis when it came would be more damaging even than it needed to be. If we are not going to be telling our children the same thing, we will need to have developed a different economic system less like a Madoff pyramid.

I'm thinking again about the North. I'll come back on that.

http://www.google.com/hostednews/afp/article/ALeqM5j4rGk_QysqKaQjv_7taCeSpu6Qrg

(ICTU demonstration today)
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PostSubject: Re: How far have we come?   Wed Mar 11, 2009 10:11 pm

cactus flower wrote:
evercloserunion wrote:
Quote :
Was that so unreasonable a hope or expectation?

I wouldn't be of the view that there is an inevitability to it.

There are still big unresolved issues in relation to the North, but there is imo no unavoidable need to be killing each other over them.
True cactus. But I am talking about this view that, if ever there was a generation which would see all this left behind, it was this one. Now that ship seems to have sailed. Will we be so optimistic for the next generation? Will we be telling our children that never again will they have to see an economic crisis, or a terrorist campaign in the North, as we did?

Not ignoring Toxics points, with which I agree, but I think the economic crash was unavoidable: it came out of an inherent build up of contradictions within the boom - this led to increased costs, squeezed profit margins, oversupply of housing and excess of capital looking for profit. The political character of the Government made it inevitable that the crisis when it came would be more damaging even than it needed to be. If we are not going to be telling our children the same thing, we will need to have developed a different economic system less like a Madoff pyramid.

I'm thinking again about the North. I'll come back on that.

http://www.google.com/hostednews/afp/article/ALeqM5j4rGk_QysqKaQjv_7taCeSpu6Qrg

(ICTU demonstration today)

You are, of course, completely correct about the inherent contradictions within a market system meaning that these things are inevitable. It will continue to be so, boom will follow bust will follow boom will follow bust. But our own little corner of the planet has particular problems that were completely avoidable, and our reputation is currently at a severe low as a result. There was always going to be a downturn, that's inevitable, but the extent and nature, well that's entirely the loving creation of Fianna Fail and their PD cohorts...
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PostSubject: Re: How far have we come?   Wed Mar 11, 2009 10:42 pm

toxic avenger wrote:
cactus flower wrote:
evercloserunion wrote:
Quote :
Was that so unreasonable a hope or expectation?

I wouldn't be of the view that there is an inevitability to it.

There are still big unresolved issues in relation to the North, but there is imo no unavoidable need to be killing each other over them.
True cactus. But I am talking about this view that, if ever there was a generation which would see all this left behind, it was this one. Now that ship seems to have sailed. Will we be so optimistic for the next generation? Will we be telling our children that never again will they have to see an economic crisis, or a terrorist campaign in the North, as we did?

Not ignoring Toxics points, with which I agree, but I think the economic crash was unavoidable: it came out of an inherent build up of contradictions within the boom - this led to increased costs, squeezed profit margins, oversupply of housing and excess of capital looking for profit. The political character of the Government made it inevitable that the crisis when it came would be more damaging even than it needed to be. If we are not going to be telling our children the same thing, we will need to have developed a different economic system less like a Madoff pyramid.

I'm thinking again about the North. I'll come back on that.

http://www.google.com/hostednews/afp/article/ALeqM5j4rGk_QysqKaQjv_7taCeSpu6Qrg

(ICTU demonstration today)

You are, of course, completely correct about the inherent contradictions within a market system meaning that these things are inevitable. It will continue to be so, boom will follow bust will follow boom will follow bust. But our own little corner of the planet has particular problems that were completely avoidable, and our reputation is currently at a severe low as a result. There was always going to be a downturn, that's inevitable, but the extent and nature, well that's entirely the loving creation of Fianna Fail and their PD cohorts...
Great, we have someone to blame. I wonder how did the good times start? Spontaneous combustion I suppose, organic growth maybe, doesn't matter anyway, let’s get on with the blame game.
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PostSubject: Re: How far have we come?   Wed Mar 11, 2009 10:57 pm

tonys wrote:

Great, we have someone to blame. I wonder how did the good times start? Spontaneous combustion I suppose, organic growth maybe, doesn't matter anyway, let’s get on with the blame game.

That's the Brendan O'Connor line, we have to get on with it, never mind who did what, the time for blame has passed. As if the two are mutually exclusive. My view, for what little it's worth, is that there is no better future deterrence to recklessness and dodgy dealing than to make an example of the people responsible this time. Call it a cautionary tale. The blame game hasn't even properly begun. The 'good times' ended in 2001, the real solid growth. The rest was a pyramid scheme, pure and simple.
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PostSubject: Re: How far have we come?   Wed Mar 11, 2009 11:07 pm

toxic avenger wrote:
tonys wrote:

Great, we have someone to blame. I wonder how did the good times start? Spontaneous combustion I suppose, organic growth maybe, doesn't matter anyway, let’s get on with the blame game.

That's the Brendan O'Connor line, we have to get on with it, never mind who did what, the time for blame has passed. As if the two are mutually exclusive. My view, for what little it's worth, is that there is no better future deterrence to recklessness and dodgy dealing than to make an example of the people responsible this time. Call it a cautionary tale. The blame game hasn't even properly begun. The 'good times' ended in 2001, the real solid growth. The rest was a pyramid scheme, pure and simple.
It can be any line it likes, but simplistic shite like "the people I don't like are to blame for bringing down the house of cards (even if they were the same people who built it in the first place)" cannot be let pass without comment.
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PostSubject: Re: How far have we come?   Wed Mar 11, 2009 11:21 pm

tonys wrote:
toxic avenger wrote:
tonys wrote:

Great, we have someone to blame. I wonder how did the good times start? Spontaneous combustion I suppose, organic growth maybe, doesn't matter anyway, let’s get on with the blame game.

That's the Brendan O'Connor line, we have to get on with it, never mind who did what, the time for blame has passed. As if the two are mutually exclusive. My view, for what little it's worth, is that there is no better future deterrence to recklessness and dodgy dealing than to make an example of the people responsible this time. Call it a cautionary tale. The blame game hasn't even properly begun. The 'good times' ended in 2001, the real solid growth. The rest was a pyramid scheme, pure and simple.
It can be any line it likes, but simplistic shite like "the people I don't like are to blame for bringing down the house of cards (even if they were the same people who built it in the first place)" cannot be let pass without comment.

I would not say the same people built the original boom at all, but one thing is for sure, that boom ended in 2001. What occurred after that was an economic sugar-rush, accompanied by an unhealthy dollop of profligacy and cronyism. Or do you believe that it was completely natural for pokey semi-d's in outer Dublin to go for the same prices as chateaus with substantial estates in France? And if not, do you think it was wise to both encourage that market bulge further and to deliberately base the public finances on the revenue from stamp duty and the like?
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PostSubject: Re: How far have we come?   Thu Mar 12, 2009 12:15 am

But what about evercloserunion's "real and present horror"?
Quote :
The Guardian talks about how members of this Good Friday generation now fear a return to the gun, which they have hitherto only experience vicariously, through the stories of their parents. Similarly, the Celtic Tiger generation has hitherto only expericenced national economic hardship vicariously.
How are the older ones amongst us supposed to look the young ones, who are just coming of age and into the workforce, in the eye, having burnt off the benefits of the 1990s growth and development in three of four profligate and foolish years? If blame is to be thrown around, I have to say the young could be forgiven for some fist shaking in our direction. Even if we voted against FF, how energetic was our opposition? If it was in any way comparable to the limp efforts of Labour and Fine Gael up to last year, we would have to call ourselves complicit. Thank god evercloser didn't mention what we've done to the environment too Embarassed

This young generation in Ireland, if the usual studies are to be believed, have grown up confident in themselves and their future place in the world. Now for a lot of them the reality is no job, no money and not even the certainty of being able to emigrate for work. Most of them have had no practice at being poor: staying in bed on Wednesday waiting for the Thursday dole cheque is an unknown concept. Add to that the prospect of political violence, but without the shared feeling that it is justifiable...
A shock to the system all right.
On the plus side, there is for most people young people health and energy, the possibility of more study and the lack of ties. They will have to face into it, and sort out the mess we've handed to them. We may just hope that they don't turn on us the way we have turned on the bankers.
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PostSubject: Re: How far have we come?   Thu Mar 12, 2009 12:21 am

Off with yer heads the lotta ya!!!
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PostSubject: Re: How far have we come?   Thu Mar 12, 2009 12:44 am

toxic avenger wrote:
tonys wrote:
toxic avenger wrote:
tonys wrote:

Great, we have someone to blame. I wonder how did the good times start? Spontaneous combustion I suppose, organic growth maybe, doesn't matter anyway, let’s get on with the blame game.

That's the Brendan O'Connor line, we have to get on with it, never mind who did what, the time for blame has passed. As if the two are mutually exclusive. My view, for what little it's worth, is that there is no better future deterrence to recklessness and dodgy dealing than to make an example of the people responsible this time. Call it a cautionary tale. The blame game hasn't even properly begun. The 'good times' ended in 2001, the real solid growth. The rest was a pyramid scheme, pure and simple.
It can be any line it likes, but simplistic shite like "the people I don't like are to blame for bringing down the house of cards (even if they were the same people who built it in the first place)" cannot be let pass without comment.

I would not say the same people built the original boom at all, but one thing is for sure, that boom ended in 2001. What occurred after that was an economic sugar-rush, accompanied by an unhealthy dollop of profligacy and cronyism. Or do you believe that it was completely natural for pokey semi-d's in outer Dublin to go for the same prices as chateaus with substantial estates in France? And if not, do you think it was wise to both encourage that market bulge further and to deliberately base the public finances on the revenue from stamp duty and the like?
I believe it was completely natural for builders to keep building for as long as demand out stripped supply, up to '06. At that point the pendulum began to swing the other way, but these are medium term commitments, taking some years from beginning to end and I believe the change happened much faster than anyone thought possible and for reasons completely outside of our control and not foreseen by anyone, namely the US sub prime issue & following world wide credit crunch. The result is we have had a year and a half of over supply and a year and a half of putting the breaks on as fast as possible.

The tax plan would have been to gradually switch away from property taxes to a more broad based system, in the event we didn't get the time to do that. Not withstanding the mistake of not changing the tax base earlier, we all enjoyed the benefits of the huge property tax take, through low direct taxes & increased spend on services and infrastructure, so forgive me if I don't have much sympathy with the "I told you so's", the "everyone could see it coming" brigade & the "where did all the money go" simpletons.
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PostSubject: Re: How far have we come?   Thu Mar 12, 2009 12:56 am

House prices flattened off in 2006, two years before sub prime hit. The reliance on property tax was a bad idea from day one, not from last year. Excessive taxes on housing pushed up prices, adding pressures for wage increases to allow people to pay mortgages. Taking out a 30 year mortgage to pay government taxes (over 40% of purchase price) was in itself a mad position to put people into.
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PostSubject: Re: How far have we come?   Thu Mar 12, 2009 1:01 am

cactus flower wrote:
House prices flattened off in 2006, two years before sub prime hit. The reliance on property tax was a bad idea from day one, not from last year. Excessive taxes on housing pushed up prices, adding pressures for wage increases to allow people to pay mortgages. Taking out a 30 year mortgage to pay government taxes (over 40% of purchase price) was in itself a mad position to put people into.
So, what are you suggesting?, that when property started to move at a pace outstripping supply '96/'97/'98 the government should have lowered taxes on them?, to what effect?
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PostSubject: Re: How far have we come?   Thu Mar 12, 2009 1:05 am

They should have maintained a stable tax structure and viewed taxes that come from a boom as a surplus bonus rather than providing the foundation for day to day expenditure. But they got it wrong and so did the opposition throughout it, in fairness.
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PostSubject: Re: How far have we come?   Thu Mar 12, 2009 1:13 am

johnfás wrote:
They should have maintained a stable tax structure and viewed taxes that come from a boom as a surplus bonus rather than providing the foundation for day to day expenditure. But they got it wrong and so did the opposition throughout it, in fairness.
They did to an extent, that's why we are about the only country in Europe with a pension fund of some 20 billion at the time. To allow the growth in the public service numbers & in particular their pay was a serious mistake, on the other hand we were all crying out for more & better services, maybe they should have told us to f..k off and be sensible, but they didn't, so here we are trying to find someone to blame. I'd suggest we try the mirror.
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PostSubject: Re: How far have we come?   Thu Mar 12, 2009 1:36 am

tonys wrote:
cactus flower wrote:
House prices flattened off in 2006, two years before sub prime hit. The reliance on property tax was a bad idea from day one, not from last year. Excessive taxes on housing pushed up prices, adding pressures for wage increases to allow people to pay mortgages. Taking out a 30 year mortgage to pay government taxes (over 40% of purchase price) was in itself a mad position to put people into.
So, what are you suggesting?, that when property started to move at a pace outstripping supply '96/'97/'98 the government should have lowered taxes on them?, to what effect?

You are nearly 10 years wrong. Supply outstripped demand about 2006. Do you remember the Bacon Reports, queues to buy houses and prices shooting up? That was a housing shortage. India was a rapidly growing economy that dealt with overheating three years ago by stopping lending for raw land and restricting mortgage lending. The British stepped in and lent money, but the Indian banks escaped the worst of what has happened to our banks.

A property tax on all residential property could have provided for local government and local infrastructure. Relying on one-off point of purchase taxes to fund current expenditure was not sensible at any stage.
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PostSubject: Re: How far have we come?   Thu Mar 12, 2009 1:43 am

tonys wrote:

I believe it was completely natural for builders to keep building for as long as demand out stripped supply, up to '06. At that point the pendulum began to swing the other way, but these are medium term commitments, taking some years from beginning to end and I believe the change happened much faster than anyone thought possible and for reasons completely outside of our control and not foreseen by anyone, namely the US sub prime issue & following world wide credit crunch. The result is we have had a year and a half of over supply and a year and a half of putting the breaks on as fast as possible.

The tax plan would have been to gradually switch away from property taxes to a more broad based system, in the event we didn't get the time to do that. Not withstanding the mistake of not changing the tax base earlier, we all enjoyed the benefits of the huge property tax take, through low direct taxes & increased spend on services and infrastructure, so forgive me if I don't have much sympathy with the "I told you so's", the "everyone could see it coming" brigade & the "where did all the money go" simpletons.

Despite your aversion to people who say they saw it coming, I saw it, my dad saw it, virtually anyone who lived in London in the late 1980s saw it, all we didn't know was the exact date it would happen. Blaming US sub-prime isn't good enough, at least not on its own. The exact same thing was happening here, young people taking out 100 to 120 percent mortgages on houses they could never have hoped to afford, encouraged by politicians and the banks, told that the good times were here for ever, that downturns were a thing of the past. Meanwhile bankers were secretly putting their banks at insane risk, both through reckless lending in the mortgage sector and through their exposure on a select group of developers' land banks and retail developments, able to do so because of a cult of de-regulation (which, fair enough, was common to most English-speaking countries), one that had a particularly negative set of consequences here due to the type of people who were allowed to flourish in that environment. As to the 'where did all the money go simpletons', is it so bad for someone to ask whether 'rainy day' money should have been put aside instead of irresponsible profligacy, money wasted on pointless quangos and bureaucracy, buying elections, and buying off every interest group known to man? I would also take issue with the 'we all enjoyed' the property tax take, the rising tide did not lift all boats. The gap between rich and poor grew massively over the course of the decade, while areas such as Donegal and North Mayo hardly saw the boom at all, at least not that they'd have noticed. Ultimately the whole thing was indeed a house of cards after 2001, an illusory credit-based boom, tand had anyone in government been awake they'd have known that we were heading straight for the wall, US sub-prime or no US sub-prime. Instead they decided to hit the accelerator...
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PostSubject: Re: How far have we come?   Thu Mar 12, 2009 1:45 am

Quote :
Speaking at the Oireachtas Committee on Economic Regulatory Affairs yesterday, Mr Hurley said the Central Bank had warned that the property sector could not sustain between 70,000 and 90,000 new houses every year when the “natural demand” was for 50,000.

http://www.irishtimes.com/newspaper/finance/2009/0311/1224242661926.html
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PostSubject: Re: How far have we come?   Thu Mar 12, 2009 1:48 am

The natural demand is going to decrease even further owing to emigration both of Irish people and newcomers.
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PostSubject: Re: How far have we come?   Thu Mar 12, 2009 2:06 am

http://www.finfacts.com/irelandbusinessnews/publish/article_10007932.shtml

Michael Hennigan here on warnings given to Cowen in 2005.
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PostSubject: Re: How far have we come?   Thu Mar 12, 2009 2:17 am

Quote :
The Irish Times for example noted in its recently published results for 2005, that it is exposed to economically sensitive advertising revenues. Advertising revenues grew by 9.5% in 2005 and it is believed that 60% of its estimated advertising income of €76 million in 2005 was property related.
- finfacts







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PostSubject: Re: How far have we come?   Thu Mar 12, 2009 2:29 am

cactus flower wrote:
tonys wrote:
cactus flower wrote:
House prices flattened off in 2006, two years before sub prime hit. The reliance on property tax was a bad idea from day one, not from last year. Excessive taxes on housing pushed up prices, adding pressures for wage increases to allow people to pay mortgages. Taking out a 30 year mortgage to pay government taxes (over 40% of purchase price) was in itself a mad position to put people into.
So, what are you suggesting?, that when property started to move at a pace outstripping supply '96/'97/'98 the government should have lowered taxes on them?, to what effect?

You are nearly 10 years wrong. Supply outstripped demand about 2006. Do you remember the Bacon Reports, queues to buy houses and prices shooting up?
Read my reply again.
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PostSubject: Re: How far have we come?   Thu Mar 12, 2009 2:36 am

tonys wrote:
cactus flower wrote:
tonys wrote:
cactus flower wrote:
House prices flattened off in 2006, two years before sub prime hit. The reliance on property tax was a bad idea from day one, not from last year. Excessive taxes on housing pushed up prices, adding pressures for wage increases to allow people to pay mortgages. Taking out a 30 year mortgage to pay government taxes (over 40% of purchase price) was in itself a mad position to put people into.
So, what are you suggesting?, that when property started to move at a pace outstripping supply '96/'97/'98 the government should have lowered taxes on them?, to what effect?

You are nearly 10 years wrong. Supply outstripped demand about 2006. Do you remember the Bacon Reports, queues to buy houses and prices shooting up?
Read my reply again.

Sorry tonys, you're right, I overlooked those words. I don't agree with them though - do you have any figures to back them up? By the early 1990s there was a serious build up of unmet demand for housing that added on to new household formation took some years to clear.
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