expat girl wrote:

I'm not sure I'd entirely agree with Morgan Kelly. In what way is our property bubble soo much worse than the UK's?? Or the US, or Spain?? Frankly, if he could achieve some predictions for these countries as well by comparison, I would be more interested in hearing him. By my estimation, house prices need to fall 55% from peak to bring them back within the realms of the couple who are both on todays average industrial wage. They have already fallen about 30%. Falls may overshoot, but I doubt they would overshoot for too long; people would realise there were bargains to be had. At least for stuff with good amenities/public transport.

As for wage cuts, I'm not sure I'm for them. They would remove vast amounts of spending money from the economy, and, note, these are going to be the only people spending as they have permanent jobs. I would suspect that an agreed pay FREEZE for 3 years and a radical expansion of the income tax base might achieve the same effect. Pay cuts have a spectacularly negative effect psychologically, just what we DON'T need right now

Finally, re property taxes, can I suggest taxing by square footage and/or energy efficiency rather than by price?? price is a little difficult to assess right now. There has to be some exemption for those on fixed incomes (pensioners etc) or those with unmortgaged houses who end up on social welfare. The council tax in the UK was very hard on those with fixed incomes and went up arbitrarily depending on how broke the council was. Find someone elses property tax model, NOT THAT ONE!!!

Is he basing the 80% fall on the similar value fall of the ISEQ ? It seems awful high and it'd be a frightening wipeout of wealth that indicates something a lot more serious than negative equity if true. I can't help thinking we'd have to get down to relying on natural resources that are local and easy to produce. Even your enlightened version of a property tax is more of a 'resource' tax.

All those McMansions on those hills though ...

Auditor #9 wrote:

expat girl wrote:

I'm not sure I'd entirely agree with Morgan Kelly. In what way is our property bubble soo much worse than the UK's?? Or the US, or Spain?? Frankly, if he could achieve some predictions for these countries as well by comparison, I would be more interested in hearing him. By my estimation, house prices need to fall 55% from peak to bring them back within the realms of the couple who are both on todays average industrial wage. They have already fallen about 30%. Falls may overshoot, but I doubt they would overshoot for too long; people would realise there were bargains to be had. At least for stuff with good amenities/public transport.

As for wage cuts, I'm not sure I'm for them. They would remove vast amounts of spending money from the economy, and, note, these are going to be the only people spending as they have permanent jobs. I would suspect that an agreed pay FREEZE for 3 years and a radical expansion of the income tax base might achieve the same effect. Pay cuts have a spectacularly negative effect psychologically, just what we DON'T need right now

Finally, re property taxes, can I suggest taxing by square footage and/or energy efficiency rather than by price?? price is a little difficult to assess right now. There has to be some exemption for those on fixed incomes (pensioners etc) or those with unmortgaged houses who end up on social welfare. The council tax in the UK was very hard on those with fixed incomes and went up arbitrarily depending on how broke the council was. Find someone elses property tax model, NOT THAT ONE!!!

Is he basing the 80% fall on the similar value fall of the ISEQ ? It seems awful high and it'd be a frightening wipeout of wealth that indicates something a lot more serious than negative equity if true. I can't help thinking we'd have to get down to relying on natural resources that are local and easy to produce. Even your enlightened version of a property tax is more of a 'resource' tax.

All those McMansions on those hills though ...

He said 80% "in real terms" & "it will take ten years to recover", you could read that as anything, depending on what he expects inflation to be over the next ten years, but he's probably expecting a 50% reduction in price from peak.

I'd like to see Morgan Kelly's full paper. Anyone know if its obtainable?

I have a lot of time for Morgan Kelly as an economist, but I don't think he knows about housing needs, and his solutions, if correctly summarised, I think are questionable.

He seems to be suggesting that we demolish some of the small percentage of housing that we have that is built to modern energy efficient building codes in the last two years and leave a lot of people living in overcrowded substandard accommodation.

Economists didn't solve the housing price crisis in the 1990s and early 2000s, and I don't think that on their own they have the answers now.

His solution is a bit like that of people who say we need a war to wipe out unproductive assets.

I would like to know what his price reduction figures are based on. We have already had one full year with very little housing being built and 2009 will be another one.

tonys wrote:

He said 80% "in real terms" & "it will take ten years to recover", you could read that as anything, depending on what he expects inflation to be over the next ten years, but he's probably expecting a 50% reduction in price from peak.

This is a comparative measure to other values in an economy I guess which yeah could mean anything. Is he using smoke and roundabouts himself on that one ? Depending on what happens we could be lucky to have a ton of houses built - what if the Irish Diaspora come back here with a few pounds in their pockets ? All those quarter million empties might come in handy, we'd have a reverse Famine.

Does he actually want to destroy houses ??? Maybe revamp the older stock but for now it has to be Kingspan insulation boards on the hollow block jobs, maybe some replastering and other low-tech insulation methods.

I'd worry about the McMansions though although they're hardly worrying about themself.

Auditor #9 wrote:

I'd worry about the McMansions though although they're hardly worrying about themself.

How many McMansions do we have? Not that many around the Dublin area. Ireland is very different to the USA in that regard or even England. We have a property in England which is as large as our property in Dublin and the value would be roughly a quarter of our house here despite it being a 20 minute train into central London, which is the same as it takes from our house here on the bus. The point being that most people in Dublin, even the wealthy, live in comparably small houses when set against people living on the outskirts of other large cities. The difference is we just pay an awful lot for them. Most houses, with some exceptions, down in Killiney are semi detached or detached houses with standard gardens which aren't actually that big, they just cost alot. Or did cost alot.

cactus flower wrote:

I'd like to see Morgan Kelly's full paper. Anyone know if its obtainable?

I have a lot of time for Morgan Kelly as an economist, but I don't think he knows about housing needs, and his solutions, if correctly summarised, I think are questionable.

He seems to be suggesting that we demolish some of the small percentage of housing that we have that is built to modern energy efficient building codes in the last two years and leave a lot of people living in overcrowded substandard accommodation.

Economists didn't solve the housing price crisis in the 1990s and early 2000s, and I don't think that on their own they have the answers now.

His solution is a bit like that of people who say we need a war to wipe out unproductive assets.

I would like to know what his price reduction figures are based on. We have already had one full year with very little housing being built and 2009 will be another one.

Some of the papers are available but not Kelly's (yet?).
http://www.irisheconomy.ie/Crisis/

Thanks very much Zhou. Getting the right advice is important, and one of the things that doesn't seem to be working out for the Government. G. Fitzgerald was saying that in his day Government had 17 in-house economists and by last summer it was down to 3. The Regulator's office was clearly understaffed both in quantity and quality perhaps.

Kelly may be an acute guy in terms of what has gone wrong, but it doesn't mean to say he has the right solutions for a housing oversupply. I also think that making predictions in present circumstances (beyond the obvious that there is a severe and dangerous downturn) is shooting in the dark.

I never understood why people liked horror movies but I think I do now. I read Kelly's articles through my fingers at this stage. It's terrifying yet thrilling.

Morgan Kelly used not to scare me because he didn't factor inflation into his price drop forecasts. I reckoned I and many others could tough it out and get out intact. With the FT lex column forecasting deflation for Ireland, Spain and Greece things have changed substantially.

To be honest there is a bit of a reality disconnect. I think it is because I am part of the TV generation. If houses go to 20% of their value then we could have seious social unrest and I could be a leading agitator. The way things are going one couldn't be blamed for contemplating survivalism.

Zhou_Enlai wrote:

I never understood why people liked horror movies but I think I do now. I read Kelly's articles through my fingers at this stage. It's terrifying yet thrilling.

Morgan Kelly used not to scare me because he didn't factor inflation into his price drop forecasts. I reckoned I and many others could tough it out and get out intact. With the FT lex column forecasting deflation for Ireland, Spain and Greece things have changed substantially.

To be honest there is a bit of a reality disconnect. I think it is because I am part of the TV generation. If houses go to 20% of their value then we could have seious social unrest and I could be a leading agitator. The way things are going one couldn't be blamed for contemplating survivalism.

Well congratulations on your megabyte of quality posts Zhou!

I'm wondering how much hyperbole isn't involved in Kelly's price prognosis if not some downright irresponsibility on his part with such a prediction ? There's a limit it'll reach, presumably, as the whole thing depresses. How depressed it will get has the limit or floor of our natural resources (for which we're poorly prepared to exploit) but that's an Emergency, Wartime-like survivalist scenario which is morbidly fetishistic to contemplate but which won't come unless the like of Morgan Kelly's Dooming will half push it there.

On the way up they were talking it up to Mars and now on the way down they are talking it into the stone age.

Many thanks A#9. I am shocked that I have reached a Mb of posts. I can now add a wasted adulthood to a wasted youth.

If things are really going as bad as Morgan Kelly is predicting then it will be a stern test of how our democracy deals with such a crisis. If the Government and the social partners fail to address matters then we could see big changes in the way things are managed. Workers might be stripped of their current rights or Labour's time might come as people demand more equitable distribution of scarce wealth.

Zhou_Enlai wrote:

Many thanks A#9. I am shocked that I have reached a Mb of posts. I can now add a wasted adulthood to a wasted youth.

If things are really going as bad as Morgan Kelly is predicting then it will be a stern test of how our democracy deals with such a crisis. If the Government and the social partners fail to address matters then we could see big changes in the way things are managed. Workers might be stripped of their current rights or Labour's time might come as people demand more equitable distribution of scarce wealth.

Not wasted on us Zhou, we have learned much from your fiendish oriental wisdom and insights, as in this concise and insightful post, which really says it all.

On PrimeTime now ...

George Lee
Philip O'Connell, head of social research ESRI
Brid O Brien, Head of Policy Research National Organisation of Unemployed
Clement Herron, Real Estate Agent, Portlaoise

Jesus, that poor person having to pay €800 per month for 10 years to pay off the negative equity on a mortgage. Now in public housing.

EvotingMachine0197 wrote:

Jesus, that poor person having to pay €800 per month for 10 years to pay off the negative equity on a mortgage. Now in public housing.

They should relax out of that ffs - Steorn will save them ....

Yup very jealous of the people who stayed in college right now. Have several friends in my class who did considerably worse than me in their degrees and now have funding for 25k per annum for the next 4 years doing phds... talk about nice.

Ah well there is always opportunity there if you get lucky, that's where I am aiming for. With a gazillion contingency plans running in the background .

Auditor #9 wrote:

EvotingMachine0197 wrote:

Jesus, that poor person having to pay €800 per month for 10 years to pay off the negative equity on a mortgage. Now in public housing.

They should relax out of that ffs - Steorn will save them ....

Holy fuck! I caught sight of Seán McCarthy out of the corner of my eye, after they had ID'd him so I wasn't sure it was him. I dismissed it as my own depraved sense of humour to think Primetime would take advice off him as to how 'entrepreneurs' could save us. Was it really the bould Seán? Say it ain't so! If it was then we are truly fucked. Last man out turn off the lights (and turn off Steorn's perpetual motion machine while you're at it).

It was Steorn and if Seán is the boss of Steorn it was him or he.

The Emperor Has No Clothes

O.
M.
G.



No other words suffice.

Auditor #9 wrote:

It was Steorn and if Seán is the boss of Steorn it was him or he.

The Emperor Has No Clothes

Yeh but did you see all the cool techie looking stuff around him? There where wheely-yokes on sticks and flashing lights and everything! And all that complicated scienticious writing (that only the egg heads know how to use) on the whiteboard behind him? So he must know what he's talking about!

coc wrote:

Auditor #9 wrote:

EvotingMachine0197 wrote:

Jesus, that poor person having to pay €800 per month for 10 years to pay off the negative equity on a mortgage. Now in public housing.

They should relax out of that ffs - Steorn will save them ....

Holy fuck! I caught sight of Seán McCarthy out of the corner of my eye, after they had ID'd him so I wasn't sure it was him. I dismissed it as my own depraved sense of humour to think Primetime would take advice off him as to how 'entrepreneurs' could save us. Was it really the bould Seán? Say it ain't so! If it was then we are truly fucked. Last man out turn off the lights (and turn off Steorn's perpetual motion machine while you're at it).

Yes, that was a very bad choice, one that could blow up in their faces (literally, if they have transversed the law of conservation of energy!). There are so many proven tech stories out there that to choose, potentially, the one that has most reputational risk is very poor!

Oppenheimer wrote:

coc wrote:

Auditor #9 wrote:

EvotingMachine0197 wrote:

Jesus, that poor person having to pay €800 per month for 10 years to pay off the negative equity on a mortgage. Now in public housing.

They should relax out of that ffs - Steorn will save them ....

Holy fuck! I caught sight of Seán McCarthy out of the corner of my eye, after they had ID'd him so I wasn't sure it was him. I dismissed it as my own depraved sense of humour to think Primetime would take advice off him as to how 'entrepreneurs' could save us. Was it really the bould Seán? Say it ain't so! If it was then we are truly fucked. Last man out turn off the lights (and turn off Steorn's perpetual motion machine while you're at it).

Yes, that was a very bad choice, one that could blow up in their faces (literally, if they have transversed the law of conservation of energy!). There are so many proven tech stories out there that to choose, potentially, the one that has most reputational risk is very poor!

Yeah - this was a clanger on the scale of Bertie telling The Economists to hang themselves.

Auditor #9 wrote:

Oppenheimer wrote:

coc wrote:

Auditor #9 wrote:

EvotingMachine0197 wrote:

Jesus, that poor person having to pay €800 per month for 10 years to pay off the negative equity on a mortgage. Now in public housing.

They should relax out of that ffs - Steorn will save them ....

Holy fuck! I caught sight of Seán McCarthy out of the corner of my eye, after they had ID'd him so I wasn't sure it was him. I dismissed it as my own depraved sense of humour to think Primetime would take advice off him as to how 'entrepreneurs' could save us. Was it really the bould Seán? Say it ain't so! If it was then we are truly fucked. Last man out turn off the lights (and turn off Steorn's perpetual motion machine while you're at it).

Yes, that was a very bad choice, one that could blow up in their faces (literally, if they have transversed the law of conservation of energy!). There are so many proven tech stories out there that to choose, potentially, the one that has most reputational risk is very poor!

Yeah - this was a clanger on the scale of Bertie telling The Economists to hang themselves.

I did enjoy Liam Ryan of BMS and Andrew Deegan (I think the guy in the Docklands Innovation Centre) - both very passionate about Ireland and their business, and pragmatically positive (I don't know what I mean by that!) and that is exactly what I believe we need a dose of from time to time in this economic climate.

Auditor #9 wrote:

Yeah - this was a clanger on the scale of Bertie telling The Economists to hang themselves.

For Christs sake can no one get that right.
He said 'Sitting on the sidelines, cribbing and moaning is a lost opportunity. I don't know how people who engage in that don't commit suicide because frankly the only thing that motivates me is being able to actively change something,'

tonys wrote:

Auditor #9 wrote:

Yeah - this was a clanger on the scale of Bertie telling The Economists to hang themselves.

For Christs sake can no one get that right.
He said 'Sitting on the sidelines, cribbing and moaning is a lost opportunity. I don't know how people who engage in that don't commit suicide because frankly the only thing that motivates me is being able to actively change something,'

"Commit suicide" ... lovely.

Did you read his body language at all tonys - he was playing to an in-crowd I thought. I could translate that expression above for you you know.