Who do you beleive contributed most to the recession

sinnerboy

For myself - it is the banks

They sell money . They sold too much of it

1. To developers . When they were leant too much too easily - development land and construction costs rose too quickly . Simple supply + demand .
2 .To you and me . As a consequence we all paid too much for our houses

And when it all went wrong we rescued the banks . With higher taxes . We still have to pay interest rate hikes now so " the banks can return to profitability"

And what of government . I believe they rode a tiger ( sorry to re use that analogy in this context ) which appeared to be simply benevolent for too long . They genuinely failed to understand and/or failed to muster the political courage to kill the apparent golden goose ( again sorry for the corny metaphor ) . How could they be seriously expected to turn off the income stream from the construction boom . I am not apologising for them - I wish now that they had done so . The hangover is an overstaffed public service and a reduction to you and me in delivered services .

And then - you and me . Did we really believe the fundamentals of the economy were sound ? That property investment was fail safe ? Perhaps we had no choice . I regretted not buying a house between 97-00 believing that what has recently happened was going to happen a lot sooner . I believed "if I don't but now I will never be able to buy" . Anybody else ? . Can we blame anyone else - or as individuals do we have to swim the tide in front of us ? ( crap metaphor no 2 )

.

sydthebeat

all of the above.... some more than others however....

The government were ultimately responsible.

They allowed the banking sector have way too much influence on our economy and how it works. Banks are private businesses whose sole focus is profit making. Its a dichotomy to expect banks to act in favour of the nation they operate in. the financial regulator failed absolutely miserably, but the buck stops at the government who appointed them and set their terms of reference. Its pointless having a national regulator if banks are able to expose themselves to risks which occur outside of the regulators jurisdiction.If anything is to be learned from this recession its that the banks must never again be allowed have the same powerhold over our economy.
The greed in search of 'economic growth' is another main factor. The government measured the nations wealth in terms of economic growth instead of its citizens welfare. We became a low tax, high cost, highly indebted nation very very quickly with no regard to value for money. Our response to every public issue was to throw money at it with no regard to end result. We have created an immovable monster in the public services where trade union ideologies have institutionalised any semblance of idependent though and worthwhileness (?). Every public sector decision is made against a background of white tape specificaly designed to diffuse responsibility. The worst case of all was the report from sligo general last year which showed a responsibility hierarchy systemetically desgined so as not one person was ultimately held responsible for ANY process in the hospital.!! Follow on from that the outcrys from trade unions if its members need upskilling or training in new technologies or processes...... if you did that in the private sector youd be very quickly out the door.! enough rant...
Developers are of course to blame, but developers are like the simple kid at the back of the class, not very bright and will go along with anything. It was the banks who threw money and credit at these people, what did they expect.....
Dunner: "pstt mr banker, ive a chance of buying a few acres in ballsbridge, its only 57 million an acre..... any chance of a loan?"
Banker: "go on my son..... sure money coming in p1ss cheap from the yanks..."

... and finally... we also have ourselves to blame. we totally lost the run of ourselves.. borrowing on credit cards, HPs, personal loans.. mortgages etc. we paid way above and beyond the value of houses, cars, holidays etc....
We accepted an economy where house values went from 4 times the average industrial wage to 12-15 times and we didnt bat an eyelid....
We succumbed to the pressure of the media telling us we 'have to get on the ladder now, or we'll never afford it'....


and worst of all.... we vote FF in because they kept feeding our greed.....

sinnerboy

No disputing anything there Syd . But I do beleive that that the main driver was the banks . The pollys could not resist that force . Imagine back in 05/06 if they had tried to . Who would have supported them then ? .

Not the opposition parties who don't forget all based 07 election manifestos on the premise that "all was ok" economically . There was no obvious realisation in "the body politic" of what lay ahead . I think any perceived attempt to "dampen the economy" would have been angrily resented by voters .

It was so nice to own a house that continued to balloon in value wasn't it ? Whilst "off the ladder" it was frightening but once "on" - who wanted it to stop - honestly . ? Who reflected upon - "will my kids be able to buy a house?" . That is one blessing . Perhaps now ours will when their time comes .

I heard a Canadian economic commentator on drivetime radio explain that Canadas' banking system abstained from international trading in mortgages and other financial products . They grew slower then - but are escaping the worst affects now . Perhaps a small island economy comprising less that 1% population of the EU can/could not not do this .

So will it happen again ? And again ? Perhaps so . And therein lies perverse hope .

This time will pass .

.

sydthebeat

sinnerboy wrote: »

I heard a Canadian economic commentator on drivetime radio explain that Canadas' banking system abstained from international trading in mortgages and other financial products . They grew slower then - but are escaping the worst affects now . Perhaps a small island economy comprising less that 1% population of the EU can/could not not do this .

.

Well, isnt that the sign of a good government....
those who wanted their cake and eat it too are now paying the price...

the epitome of the perversion, to me, was an apprentice plumber who came into us 2 years ago.. he was single, living with his parents. his parent had given him a site to build on....
He wanted a 5500 sq ft 7 bed mansion.... the banks had already cleared him for a 300,000 mortgage....
No matter how much we politely pointed out the build and servicing costs to him him was not perturbed in any way....
He got his permission and, thank god, hadnt started building. The site is now up for sale....

where's the checks and balances??

DOCARCH

I don't think individually tha the banks or the developers can be (individually) blamed for our (deeper than most) recession.

I believe government policy encouraged, aided and abetted the property bubble (McCreevy et al), facilitated and encoraged the banks to lend and facilitated the rise of the 'mega' developers.

The whole economy for the last 10 years was basically driven by stamp duty and the governmnet got drunk on watch!

The house of cards started to crumble well before the global recession kicked in.

parka

I've always wondered why people refer to the 'boom' as good times. I knew a guy who left home at 5 am to get to work for 9, most of his estate did the same.
I blame the government who seemed to oblivious to anything happening around them. Smart economy :rolleyes:

sinnerboy

Agreed . The apparent prosperity promised by increasing salaries was eaten up by ever increasing prices - for everything .

We worked our socks off . To be plunged into debt . By the banks - for the banks .

I stick to my guns . Most polled so far (50% ) blame the govt . But they acted as we wished them to . They would have lost votes otherwise

Real power does not rest with us or our governments . It rests with those who really hold the purse strings .

As individuals we need to borrow to buy our houses
Developers need to borrow to build to any level of volume
Govt. now needs to borrow to keep essential services going .

The bankers are like drug dealers . They got us hooked on cheap credit .
Now the real bill is due . And it hurts .

.

sydthebeat

parka wrote: »

I've always wondered why people refer to the 'boom' as good times. I knew a guy who left home at 5 am to get to work for 9, most of his estate did the same.
I blame the government who seemed to oblivious to anything happening around them. Smart economy :rolleyes:

the 'booms' times were good because when i left college, got a job and bought a car it was a brand new vw polo.. costing 13K

40 years ago when my father finished serving his time he got a job and bought his first car.... costing 80 pound

.. the difference being i paid for my car by getting deep into debt on HP...
.. he paid cash for his.....

the celtic tiger was a illusion......

Poor Uncle Tom

sydthebeat wrote: »

.....the celtic tiger was a illusion......

a global mirage.....:)

7 years of famine, plague and pestelism (starting year 2..)

Carlow52

Government is to blame because

1: the D of F ignored the warning signs from the CB about credit growth.

2: the Regulator failed to constrain lending to sensible multiples of income.

A particularly insidious aspect of this was that what was driving prices was the availability of credit coupled with a reduction in income tax, I know that sound obvious but just bear with me.

10 years ago, say the average mortgage was 3 times income over 20 years, with the key number being a specific % of net take home pay.

The reduction in income taxes meant that there was more net income so the developers drove up the price so as the % was "maxed out'.

Lenders went from 20 to 25 years, developers 'maxed it' out.

Lenders went from 25 to 30 to 35 to 40 years, developers 'maxed it' out.

Lenders went for 'renting' the 3 spare rooms in a 2 bed apt:D and so on, [ 110% mortgages etc] all driven by the % of net take home pay and all the time the developers 'maxed out' the % of net income and thus the spiral.


As SB pointed out the banks are in the game for profit and will do what they can to make a profit.
This is why you need regulation as mentioned by STD for Canada.

In my view the last 2 regulators should be jailed.

The current clown is a FF appointee who will not rock the boat

Juantorena

What led to the reccession? Ultimately government - or more precisely a lack of governing/regulation. As Carlow52 intimated, both here and abroad, 'regulation' became a four letter word which got in the way of investment gains...which the global economy would not allow.

Locally? I think we're all culpable tbh. Sure you depend on regulators and government to slap us when we're being un-wise but we, as a nation, lapped up the fallacy of the past tens years...we loved it. Wore it like a badge of honour. Gave us stuff to talk to each about at dinner parties. I don't know of any scenarios were one of us went into a bank and asked them not to offer all that money.."really, it's too much".

We're pretty good, these days, at looking for scapegoats and reasons why we're not to blame for things when they go wrong. It's likely in ten, fifteen years time we'll have another upturn and the lessons will have been forgotten....and we won't be to blame then either.

It's a very, very unfortunate set of circumstances which have left 'us' in the state we're in at the moment...as a country I think we're all to blame to some extent.

archtech

I think the government were the major player in contributing to the severity of the recession. Yes the banks had involvement and yes there were factors outside of the country.. but government policy and spending hinged on income generated by the property boom.

Yes the banks did loan the developers and us the money to buy property but the main beneficiary of all property transactions with no risk to themselves were the government, whom collected stamp duty and taxes on each transaction.

And what did they do with this money, by and large wasted it (or used it to their political advantage), and lowered taxes which in turn allowed us borrow more money from the banks... to buy new cars etc which we won't otherwise have been able to afford, and in doing so we further added to the governments coppers.

Finally I think the media had a role to play they talked up the economy in the good times, and now focus on the doom and gloom.

sinnerboy

Witless cretins

how many times we were told " the fundamentals of the economy are sound"

now we keep hearing " we are where we are"

F*******g monkeys

topcatcbr

The Gov for all the reasons mentioned above.

topcatcbr

Two things keep ringing in my ear when i hear talk of this recession. both by our last finance guy. 1 this is just a blip. 2. Ill do it my way.

PeteHeat

Hi,

Syd, £80 quid for his first car ????????? Lucky man, I paid £23 for mine

To an oldy like me the Government were clearly to blame, they had so many advisors it appears they hadn't time to listen to any of them.

I fail to see how FF are still in office, what a meek population we have

.

Arrakis

In my time, I've sold and moved house 3 times. Each time I applied for a mortgage, the bank did their cals and with a little white lying, we got the loan. Never was I offered over the odds. There is two of us appling with joint wages and one time the bank agent told me "if I was to be approved for that size of a loan, I would have to be a medical consultant..!" This was for a loan of €420K and €40K in saving??

Now, the bank then sends out an auctioneer to value the proposed property. If it doesn't met the value you don't get the loan (or you try to lower the bid). The same simple motion is for a re-mortgage. The ONLY profession that tried to do me, lie to me, gazump me etc...was the profession least regulated in our land and that is the Estate Agent / Auctioneer. They collectively raised the value of property, land etc...and are well know to be seen in dark corners of the hotel cafe discussing "how we can move this forward"

That's my view, and experience...the Estate Agent / Auctioneer, and I have to tip my hat to them. They've remained well out of the firing line, but mark my words...the minute property and loans start moving again, it'll be them on the front line bitching about the low values, markups and how the banks are so hard on them...

TTFN

ThePiedPiper

Greed on the part of many sections of society is to blame in my opinion. The government became drunk on power and didn't enforce any regulation. We continuted to elect them back into government. We complained about their massive salaries, the expense accounts but it didn't really matter. Is it every single voters fault because we kept Fianna Fail in government?
The regulators do as they're told and themselves were on massive salaries, so why rock the boat?
Banks? Banking chiefs are elected by shareholders. Shareholders want profits and dividends. AIB and BOI first recorded profits of €1 billion each in about 2000 and every year until last year grew. The shareholders were delighted and kept voting them back in. Thousands of Irish people own shares. Are they all to blame?
Most people working in banks have bonuses or commissions of some sort. The motivation to give out more loans is huge, banking staff on salaries of €30,000 could earn a €10,000 bonus by achieving their personal targets. Are they all to blame too?
I know a farmer who sold 8 acres to a developper in a rural village for 3.5 million. Not a single house has even been finished. Is it the farmers fault, the developer, the bank, the planning authority? In 2008, it seemed like a good deal for everyone, now there's yet another village ruined with abandoned building sites.
Finally, for every person who bought a second house in order to profit from the rising house prices, there was no gun to their head. I know teachers with 4 and 5 properties, similarly Gardai, nurses, people from every walk of society. Anyone with 4 mortgages totalling 1.5 million who finds themselves under pressure now really only has themselves to blame but lack of accountability on everyone's part is what led us here so why change now?.

PeteHeat

RunForestRun wrote: »

Greed on the part of many sections of society is to blame in my opinion. The government became drunk on power and didn't enforce any regulation. We continuted to elect them back into government. We complained about their massive salaries, the expense accounts but it didn't really matter. Is it every single voters fault because we kept Fianna Fail in government?
The regulators do as they're told and themselves were on massive salaries, so why rock the boat?
Banks? Banking chiefs are elected by shareholders. Shareholders want profits and dividends. AIB and BOI first recorded profits of €1 billion each in about 2000 and every year until last year grew. The shareholders were delighted and kept voting them back in. Thousands of Irish people own shares. Are they all to blame?
Most people working in banks have bonuses or commissions of some sort. The motivation to give out more loans is huge, banking staff on salaries of €30,000 could earn a €10,000 bonus by achieving their personal targets. Are they all to blame too?
I know a farmer who sold 8 acres to a developper in a rural village for 3.5 million. Not a single house has even been finished. Is it the farmers fault, the developer, the bank, the planning authority? In 2008, it seemed like a good deal for everyone, now there's yet another village ruined with abandoned building sites.
Finally, for every person who bought a second house in order to profit from the rising house prices, there was no gun to their head. I know teachers with 4 and 5 properties, similarly Gardai, nurses, people from every walk of society. Anyone with 4 mortgages totalling 1.5 million who finds themselves under pressure now really only has themselves to blame but lack of accountability on everyone's part is what led us here so why change now?.

Well said.

The auctioneers were doing their job, I have yet to hear of a seller telling the agent they got them too much for the house / property they were selling.

We allowed the madness to continue by reinstating the politicians and others who were clearly incompetent.

That said I honestly believe the government are voted into power to lead, even the present incumbants are reactive instead of being proactive.

There is a lot of money sitting in banks all around this country kept there by consumers who are afraid to spend because they do not see any plan of action in place.

Consumers need to know where we are heading all we hear are rumours about areas where cuts may be imposed, fees introduced, jobs lost, levys imposed etc etc

We are now heading into the tenth (or eleventh) month since the house of cards officially came tumbling down, instead of leadership / visible action being seen to be put in place we have a govenment on holidays (not accountable) and a rumour mill that is gathering pace.

Until such time as the people can see where they stand we will have a shrinking economy, if the people know what is needed and that there is a positive future they will work towards that positive light and live while doing so.

I believe this government is either too afraid to tell the real truth or lack the back bone to openly implement the changes needed to correct the economy and bring us back to growth.

.

argosy2006

the cost of oil from summer 2007 to sep 2008.. was sky high, its doubled the cost of transport,,,and every item is delivery via ship truck rail what ever,,it put huge strain on everything,and funny thing is there was no reason for it to be trading at 147$ a barrel,, it was just oil compaines making people pay for it coz de good times were rolling back then,, serves them right, its trading for less than half that now and will be for long time

argosy2006

RunForestRun wrote: »

Greed on the part of many sections of society is to blame in my opinion. The government became drunk on power and didn't enforce any regulation. We continuted to elect them back into government. We complained about their massive salaries, the expense accounts but it didn't really matter. Is it every single voters fault because we kept Fianna Fail in government?
The regulators do as they're told and themselves were on massive salaries, so why rock the boat?
Banks? Banking chiefs are elected by shareholders. Shareholders want profits and dividends. AIB and BOI first recorded profits of €1 billion each in about 2000 and every year until last year grew. The shareholders were delighted and kept voting them back in. Thousands of Irish people own shares. Are they all to blame?
Most people working in banks have bonuses or commissions of some sort. The motivation to give out more loans is huge, banking staff on salaries of €30,000 could earn a €10,000 bonus by achieving their personal targets. Are they all to blame too?
I know a farmer who sold 8 acres to a developper in a rural village for 3.5 million. Not a single house has even been finished. Is it the farmers fault, the developer, the bank, the planning authority? In 2008, it seemed like a good deal for everyone, now there's yet another village ruined with abandoned building sites.
Finally, for every person who bought a second house in order to profit from the rising house prices, there was no gun to their head. I know teachers with 4 and 5 properties, similarly Gardai, nurses, people from every walk of society. Anyone with 4 mortgages totalling 1.5 million who finds themselves under pressure now really only has themselves to blame but lack of accountability on everyone's part is what led us here so why change now?.

irish people never complain,,, or they complain but do nothing about it,, its way we are,,,we should be like french,,, they complain and let there goverment know who paying there wages,, we just sit and nag about it to ourselfs like were doing right now,, whole irish goverment needs to be over hauled, and wages are OMG! loooney tunes! best pay goverment in de world./ brian cowan on higher salary than Obama, 'like that rugby presenter said'' i could puke on my jafacakes''

PeteHeat

argosy2006 wrote: »

the cost of oil from summer 2007 to sep 2008.. was sky high, its doubled the cost of transport,,,and every item is delivery via ship truck rail what ever,,it put huge strain on everything,and funny thing is there was no reason for it to be trading at 147$ a barrel,, it was just oil compaines making people pay for it coz de good times were rolling back then,, serves them right, its trading for less than half that now and will be for long time

As far as I know OPEC sell at a fixed price, the gamblers then step in and bet (they have fancy terms for it) what price the world will pay for oil into the future.

If you bought a tanker of oil in say June 2007 for delivery in July / August 2008 and sold shares of the load at a higher rate you win, all the consortium then need is a buyer who believes oil will increase in price and buys the whole cargo everyone wins except in July 08 of course the consumer lost.

The oil Sheiks receive a very small portion of the end cost to the consumer, just take a look at what our government takes from a litre of petrol or diesel.

.

IM0

Greed and stupidity and peer pressure. People putting things in box's for a living shouldnt be going looking for mortgages and banks shouldnt be giving them out to them..then again if the Germans hadnt been such frugal savers then there wouldnt have been such cheap credit to send inflationary house prices through the roof, people wanting a house at seemingly any cost 'upping the anty' for the rest of FTB ahving to do equally stupid things to compete, then the developers upping the prices to cater for foolish demand, so take your pick. The Germans, the Americans (sub prime lending), Iraq qar (oil spikes), banks, joe blogs and the government..place your bets

sydthebeat

me@ucd wrote: »

......People putting things in box's for a living shouldnt be going looking for mortgages and banks shouldnt be giving them out to them...

:mad:

what a disgraceful attitude....

PeteHeat

sydthebeat wrote: »

:mad:

what a disgraceful attitude....

100% in agreement.

pseudo-tech

Me@UCD , is not a million miles away from the truth! American Banks lent money to people who could not afford to pay them back. They repackaged these loans and sold them on and on and on. They knew these people could not pay them back but by the time the bubble burst there were sufficient separation between those that sold the mortgages and those who holding them. Unfortunately, for us European banks jumped onto the bandwagon!!!

sydthebeat

pseudo-tech wrote: »

Me@UCD , is not a million miles away from the truth! American Banks lent money to people who could not afford to pay them back. !

theres a huge difference between this statement and what me@ucd said...

to think some who 'packs boxes' shouldnt be looking for a mortgage is a deplorable attitude.

its the market that priced the real value of housing units out of reach of most lower paid workers. (and even middle band paid workers!!!)...

Gurgle

The Government, start to finish.
They regulated where they shouldn't, and didn't regulate where they should.

Over-regulation: building / planning permission - driving us all into identical shoe boxes generating massive profits for their shareholders, the builders.

Can't blame the builders, they're not elected by the voters to run their corporations for the common good - they're businessmen whose job it is to make money.

Under-regulation: Banking - issuing loans secured against what an asset is going to be worth? Surely there should be some limit on secured lending, loan to actual value.

Can't blame the bankers - again, they're not elected to run the banks for the common good - businessmen, making money. More so, if one bank is offering 100%+ mortgages, then any bank that doesn't follow suit is going down the drain fast.

pseudo-tech

sydthebeat wrote: »

theres a huge difference between this statement and what me@ucd said...

to think some who 'packs boxes' shouldnt be looking for a mortgage is a deplorable attitude.

its the market that priced the real value of housing units out of reach of most lower paid workers. (and even middle band paid workers!!!)...

However, the market was manipulated by cheap finance, poor regulation and Governments greed!!

sydthebeat

Gurgle wrote: »

Over-regulation: building / planning permission - driving us all into identical shoe boxes generating massive profits for their shareholders, the builders.

if anything it was under regulation...!!!!

developers demanded units designed to maximise profits and to suit minimum standards... ie designed for lowest common denominator.

planning offices did not have either the balls, or the expertise, to demand higher design standards. repetition of bland design was the order of the day. you cannot blame the designers, they are commissioned to carry out their employers brief. Planning offices alone had and have the power to demand higher architectural standards, but very very few do...

Gurgle

sydthebeat wrote: »

if anything it was under regulation...!!!!

developers demanded units designed to maximise profits and to suit minimum standards... ie designed for lowest common denominator.

planning offices did not have either the balls, or the expertise, to demand higher design standards. repetition of bland design was the order of the day. you cannot blame the designers, they are commissioned to carry out their employers brief. Planning offices alone had and have the power to demand higher architectural standards, but very very few do...

Thats my point, developers' applications for 158 standard houses at a time went through. Individual applications to build a home were rejected, driving us all into the waiting arms of the developers.