Ireland:'debt Not Driving Spending Surge'

[OnlyMe]

Not a single mention of the rate of debt growth in the whole aritcle, I wonder why?

http://www.ifaonline.co.uk/public/showPage.html?page=311997

Bank of Ireland economist Dr Dan McLaughlin says a consumer boom will fuel economic growth of 6% this year.

In the bank's economic outlook for 2006, the economist also argues that consumer spending is being driven by last year's 10% increase in household income, and not by debt. He points out that spending probably rose by 6.5% in 2005, well behind incomes growth.

[Randall Herbert]

They are obviously ignoring the existance of a Blarney bubble as well?

[Flash]

Ah, Dan McLaughlin, "The Boom-Munger" himself.

I heard him on Eamon Dunphy's Newstalk this morning. Now Dublin is nice place to be, but to hear McLaughlin, you'd think that it's a cross between Monaco, Milan and Dubai.

I was begging for the interview to get on to the "most indebted nation in Euroland" bit. But alas, it didn't happen.

What I don't understand is why Dunphy will give politicians, journalists and company CEO's ar5eholes, but when he gets any bank economist on, he just tosses him nice high balls to catch.

:angry:

EDIT: Thinking about it, house prices in Monaco and Dubai look pretty reasonable in comparison. I must be missing something surely? Why can't I see what everyone else does?

Edited January 23, 2006 by Flash

[AssetIndigestion]

"Why can't I see what everyone else does?"

Because almost everyone else is convinced of the invincibility of the Irish Property market - based on past performance. The fever is still on with the general public!

I had a little glimmer of hope over the weekend: I spoke to someone who works in an auctioneers office in a kind of low-level invisible capacity. There is talk apparently about houses not fetching expected prices and the numbers being withdrawn. Now one little story does not a trend make but I thought it was interesting all the same.

This will be the first year in many that an important fundamental - interest rates - works against the property market. In the past decade nearly every f*n event either through clever planning or amazing fluke has served to push property prices upwards.

[OnlyMe]

AssetIndigestion,

This will be the first year in many that an important fundamental - interest rates - works against the property market. In the past decade nearly every f*n event either through clever planning or amazing fluke has served to push property prices upwards.

Imagine a decade of the opposite, yes I think it will take that long if not more for the whole bubble to unwind itself.

[undersupply]

AssetIndigestion,

This will be the first year in many that an important fundamental - interest rates - works against the property market. In the past decade nearly every f*n event either through clever planning or amazing fluke has served to push property prices upwards.

Imagine a decade of the opposite, yes I think it will take that long if not more for the whole bubble to unwind itself.

Many a bargain still to be had in the emerald isle

only 1.4 million for this penthouse in galway, population 60,000

http://www.galwayadvertiser.ie/dws/pdf/GA_0501_E1_107.pdf.

Over 1000 euro a square foot

Might put in a higher offer in before the auction, surely this "value" can't last

[Guest magnoliawalls]

Many a bargain still to be had in the emerald isle

only 1.4 million for this penthouse in galway, population 60,000

http://www.galwayadvertiser.ie/dws/pdf/GA_0501_E1_107.pdf.

Over 1000 euro a square foot

Might put in a higher offer in before the auction, surely this "value" can't last

This one shown beside it is even worse - 306 Corrib Park for 290,000 euros.

I have visited someone who used to live on that estate and it is fairly rough, probably ex council and frequently had cars burnt out at the back of it. Those houses are small and at least one of the upstairs bedrooms will be a box room. To have added all those downstairs rooms they must have built over the entire garden, which is not mentioned. I am not convinced that would have got planning permission and it is "in need of modernisation".

So only 290,000 euros to live in a run down dump.

Edited January 23, 2006 by magnoliawalls

[AssetIndigestion]

AssetIndigestion,

This will be the first year in many that an important fundamental - interest rates - works against the property market. In the past decade nearly every f*n event either through clever planning or amazing fluke has served to push property prices upwards.

Imagine a decade of the opposite, yes I think it will take that long if not more for the whole bubble to unwind itself.

Perhaps so. I don't have a crystal ball. (Well actually I do, it's a glass sphere on a stand on my desk - but it doesn't work ).

Ireland is now building more houses per head than Germany did in its reconstruction efforts after WWII. Couple that with debt growth that is breaking european records.

When sentiment does change - and who knows when, what & where the trigger might be - I can imagine a race to the exit by the punters. So another possible scenario is a quicker correction followed by years of stagnation / slow falls.

The combination of events that pushed irish prices to current levels is so unusual and improbable that I can't imagine prices getting back up to these levels again for a very long time once they start moving down.

Edited January 23, 2006 by AssetIndigestion

[needle]

There will be 4 billion Euro released into the economy this year from maturing SSIA's.

That will keep the "boom" going for another while.

To say that the boom is not driven by debt is partially true but I know of several people in Ireland in way over their heads.

Also, if I remember correctly, it is against Irish law to evict people from their main residence.

[Duplex]

Ahhh, Dan Dan the Bubble man; his cadaverous, spectral, countenance sends chills down my spine when he makes his weekly (so it seems) appearance on TV. Even the government balks at ramping the debt addled economic miracle economy like deathly Dan. But to be fair to him, his remit is the maintenance of Bank of Irelands share price, and not the life prospects of the plain people of Ireland.

As AssetIndigestion, mentions the current psychosis gripping Irish economic life has been aided by an extraordinary combination of events all favouring absurd property prices, it seems reasonable to anticipate that this series of fortunate/unfortunate events will end at some stage.

Where will Dan be then? sipping bloody marys in the Bahamas, gently shaking his head a cruel smile playing on his lips and repeatedly muttering to himself, “suckers, suckers, suckers”.

[Flash]

There will be 4 billion Euro released into the economy this year from maturing SSIA's.

That will keep the "boom" going for another while.

Agreed. That's a lot of cash for just four million people.

However, the consumer now owes 125 billion Euro. So every .25% interest rate rise would take 320 milllion out of the economy and there ought to be three of those this year.

And, remember that consumer credit is growing at around 30% per year. I have a hunch that some of that SSIA money has already been spent, if you know what I mean.

"I could resist the plasma telly in the sale, so I wacked it on the credit card. And anyway, I'll get my SSIA money in the Summer"