The publics role in the economic crisis

Laminations

Based on this subject derailing another thread I thought I'd start this one to discuss the role of the public in the financial melt down. What views have you on individual responsibility?

I think people who overborrowed, overextended themselves with 100% mortgages have to share some of the responsibility, but only a small amount. The financial sector has duties of care and conduct under which they must operate. Advice was given out, subprime mortgages were invented (seems like a sure fire way to lose money), credit checks were not thorough, the financial regulator slept on the job. The media also have responsibility, they fuelled peoples expectations, but in the end, no one forced anyone to buy - they just used extreme powers of persuasion.

The fact that people were buying up property like hot snots should have triggered alarm bells in the government but instead of cooling the market they introduced policies that heated the bubble - yes other parties were suggesting similar reductions of stamp duty BUT afaik the opposition was against FF tax incentives and loopholes for investors and developers. The real supply of housing was hidden so that demand seemed higher than supply and prices kept going up. This was an artificially created market. STILL no one was forced to buy.

So are the public taking responsibility? Some people think not

Red_Marauder wrote: »

Everybody needs to take responsibility and learn from past stupidity. Government and commercail failures have been acknowledged, it is time for the public to step up to the mark on this as well.

I think they have no choice but to take responsibility - anyone who owes money and cant afford their house WILL be indebted to the banks for a very long time, their houses will be reposessed and their credit rating will be worth a dump. I wonder what is this acknowledgement of government failure you talk about? What is this acknowledgement of banking failure? Is it simply a speech of regrets? Because so far there has just been saying sorry and golden handshakes. I know if that is the case I'd prefer to be a banker who f***ed up rather than an individual borrower who f***ed up.

No bad credit ratings for failed businessmen or developers? Sure according to some they should be given more loans! And from these loans

Red_Marauder wrote: »

(the failed businessman) gets the profits. People like him - failing, trying again even more vigourously, then generating profits, is what will drive this economy out of the mire. Guffawing at ambition for wealth will only drive this country backwards.

So when a developer does it, its ambition for wealth, when an individual does it, its greed. What do you think? I think the public will shoulder their responsibility, I seriously doubt the government, bankers or financial regulator will. But at least they 'acknowledge' their failures, ay? small f***ing comfort

Liam Byrne

There are 3 different types of people that I see :

1) People who borrowed sensibly and within their means - not as an investment, but in order to buy their houses, but have since been hammered by extra taxes and the general economic mismanagement; people who borrowed sensibly for business to create employment and make a living

2) People who fell for the "property ladder" bull**** and took out 100% mortgages, or remortgaged a home to invest in a second or third

3) People who gambled on the gravy train never ending and stoked the fires (generally FF, the bankers and the developer, but also some individuals)



#3 are getting bailed out on the premise that banks "cannot be allowed to fail"

#2 are - rightly - getting a kick in the nuts for being greedy; however it sickens them that #3 are being bailed out and they're not

#1 are not at fault in my book, as they "invested" sensibly; and while "negative equity" may be a notional issue, it's not a real issue because they bought somewhere to live at a price they agreed to pay, and weren't buying to make a profit or sell it on; however these people are now hammered by extra taxes, increased interest rates due to mismanagement by the banks, and the bailout; and are sickened by the notion that capitalists get all the profits, but they are expected to pay for others' mistakes despite being sensible and prudent. This is wrong.



I've got a very low opinion of anyone who "invests" in order to hoard for a while and later sell on; they add nothing of value to what they sell, skew the natural laws of supply and demand, and they should not get rewarded for their actions. They are parasites.

Anyone who bought in order to have a home should realise that - by nature - second-hand items have less value. If they accepted this and were not being hammered by the bailouts, then there would be less disgust.

But elsewhere on threads those who claim to support capitalism and the "if you succeed, reap the rewards for the risk, but if you fail, you fail" have also come out and claimed that "(the failed businessman) gets the profits. People like him - failing, trying again even more vigourously, then generating profits, is what will drive this economy out of the mire. Guffawing at ambition for wealth will only drive this country backwards."

Money is a commodity, not an end. It is there to enable commerce, not to amass as much as possible while screwing as many people as possible.

Some of the views that people have expressed on other threads have made me want to go back to the days of bartering, so that we can let the greedy opportunists rot.

There is a massive difference between investing in a worthwhile project - getting a suitable return, creating employment, and providing a decent service - and gambling on a get-rich-quick scheme and dragging the whole country down with you, and expecting them to pick up the tab.

Some of the public got greedy along with the banks and developers, that's true.

But the distinction needs to be made between people who added to the economy and society and those who wanted to simply line their own pockets as quickly as possible.

Red_Marauder

Liam Byrne wrote: »

however these people are now hammered by extra taxes, increased interest rates due to mismanagement by the banks, and the bailout

It has been pointed out to you already that these consumers themselves added fuel to the flames of property prices. They were the vast, vast bulk of house buyers.
But there are two strange references there that I would like you to explain from the above statement which have been emboldened.

Firstly, what "increased interest rates" are you talking about?

Secondly, why are you talking about the bailout now hammering them? What exactly has the bank bailout cost those with private mortgages?

I've got a very low opinion of anyone who "invests" in order to hoard for a while and later sell on;

So basically, you have a problem with investments into commodities in general.

You don't think, for example, people should buy shares in Glanbia, or multinational pharmaceutical companies based in Ireland.

Financial markets depend on people who buy shares, hoard them until they increase in value, and then sell them on. There is no sense in asking that it be any other way.

Anyone who bought in order to have a home should realise that - by nature - second-hand items have less value.

It's not clear what you mean by this. Properties do not depreciate like cars and machinery. The number of previous owners does not have a relationship with the market value of a house.

made me want to go back to the days of bartering, so that we can let the greedy opportunists rot.

You're right, your kind of thinking is exactly what would drive this country back to the iron age.

Laminations wrote:

I wonder what is this acknowledgement of government failure you talk about? What is this acknowledgement of banking failure?

I'm talking about media reporting. The media have quite correctly been riding the Government and the banking sector hard over their failures. My point is that the media has a vested interest in assuaging the ordinary public citizen about the part he or she has played in our tiger economy.

The media will not be critical of private homeowners who constituted the extreme majority of housebuyers... and therefore were the ones pushing and pushing prices like red faced oafs in a lunch crowd.
In fact the media will not criticise anyone else who spurred on this tiger economy and inflated the bubble bar businessmen, bankers and Government.

Because blame is not acknowledged in the press and we should all be aware enough, and adult enough, and responsible enough to acknowledge it in ourselves.

djk1000

I don't think you can say "the public" and then talk about individual responsibility. A Person may be smart, but people are idiots and the bigger the group, the more idiotic they are.

This is a fact of life and the only solution that society has come up with is to trust a smaller group of people (a government) in the hope that they are lesser idiots than the bigger group and that they will come up with sensible laws and regulation to keep the bigger group in check.

But, maybe I'm just a cynic

Liam Byrne

Red_Marauder wrote: »

It has been pointed out to you already that these consumers themselves added fuel to the flames of property prices. They were the vast, vast bulk of house buyers.

But "the majority" is not "all". And "the majority" have been punished.

Red_Marauder wrote: »

Firstly, what "increased interest rates" are you talking about?

Banks and insurance companies have made bad choices, and we are now paying more as a result of their screw-ups.

Red_Marauder wrote: »

Secondly, why are you talking about the bailout now hammering them? What exactly has the bank bailout cost those with private mortgages?

2% levy on take-home pay. Additional costs and taxes. General recession with wage reductions.

All of these adversely affect the take-home pay, and many of them are being paid because of the billions being paid for bank shares that no-one else wants.

Red_Marauder wrote: »

You don't think, for example, people should buy shares in Glanbia, or multinational pharmaceutical companies based in Ireland.

I didn't say that.

I have no problem with people who invest in order to get dividends in return, and thereby get a return and create employment and create a win-win.

Red_Marauder wrote: »

Financial markets depend on people who buy shares, hoard them until they increase in value, and then sell them on. There is no sense in asking that it be any other way.

In your opinion.

The euro scuttled this in terms of "hoarders" skewing the currency markets for their own gain, increasing costs for everyone.

That worked, so why can't other examples work ?

Red_Marauder wrote: »

It's not clear what you mean by this. Properties do not depreciate like cars and machinery. The number of previous owners does not have a relationship with the market value of a house.

What I was saying was that people should view it this way, and therefore "negative equity" is less of an issue.

If a house is worth it to the owner then there's no point complaining that it's now worth less in monetary terms. It's a home - you use it as needs demand, and you get what you can for it later. If it weren't viewed as an investment that will somehow earn you more money than you paid for it down the line, then we wouldn't be in this mess.

You buy a car because you need it. You use it. You later sell it for whatever you can get, and you expect it to be worth less.

If that were how houses were viewed, then we'd all have had more of a realistic view.

Red_Marauder wrote: »

You're right, your kind of thinking is exactly what would drive this country back to the iron age.

And letting irresponsible banks and con-men call the shots and having the public bail them out is SOOOOO progressive :rolleyes:

As I've explained, the current recession (or at least the severity of it) could have been avoided if some of my views were mainstream; so I don't know how that equates to the iron age.

Also, you complain that people saw property as an investment and that that's the reason why we're in this mess, and those people should take responsibility; so why does NOT viewing a house as a money-making investment bug you so much ?

Is it simply because it kills your opportunity to blame me for any contribution to the recession ?

The above is how I viewed things, and you certainly can't have it both ways - blaming those who viewed houses as money-making opportunities and then castigating those of us who don't view them as that as being "backward".

Red_Marauder wrote: »

The media will not be critical of private homeowners who constituted the extreme majority of housebuyers... and therefore were the ones pushing and pushing prices like red faced oafs in a lunch crowd.

This has been proven to be a fallacy, considering the sudden emergence of hundreds of thousands of extra unsold units and ghost estates.

The public might have pushed the price up, but the lie that there wasn't sufficient units and that it was a case of "supply and demand" has been blown to pieces; it was for a large part, in fact, down to your "hoarders".

Red_Marauder wrote: »

Because blame is not acknowledged in the press and we should all be aware enough, and adult enough, and responsible enough to acknowledge it in ourselves.

Fine by me, but likewise I will naturally object to being lumped in with the money-focussed and irresponsible people who "invested" in houses and got 100% mortgages.

If blame needs to be apportioned, by all means do so.

But do not tar us all with the same brush.

Red_Marauder

Liam Byrne wrote: »

Originally Posted by Red_Marauder
It has been pointed out to you already that these consumers themselves added fuel to the flames of property prices. They were the vast, vast bulk of house buyers.

But "the majority" is not "all". And "the majority" have been punished

The majority of those private mortgage holders in arrears have certainly not been punished and are being given state help in keeping their houses
not only through mortgage relief programmes but through this extension announced today
http://www.irishtimes.com/newspaper/ireland/2010/0217/1224264628739.html

No such help has been offered to property developers who remain personally liable for all of their losses and who have gone bust. Rightly so.

So stop acting like it is the private mortgage holders in arrears who are being ignored.

Originally Posted by Red_Marauder
Firstly, what "increased interest rates" are you talking about?

Banks and insurance companies have made bad choices, and we are now paying more as a result of their screw-ups.

No, specifically you said mortgage holders are now being hammered with "increased interest rates". Again I am asking you, what increased interest rates?

2% levy on take-home pay. Additional costs and taxes. General recession with wage reductions.

They are not related to the bank bailout, recapitalisation was paid for by the NPRF. Why are you saying the bailout has cost money to the taxpayer as is?

Originally Posted by Red_Marauder
You don't think, for example, people should buy shares in Glanbia, or multinational pharmaceutical companies based in Ireland.

I didn't say that.

you said

I've got a very low opinion of anyone who "invests" in order to hoard for a while and later sell on;

That is the nature of investing, whether it's company shares or houses. And where is the hoarding anyway? About ten houses went up for sale on my street in the past 3 years for extraordinary prices. None of them were developers buying them. Developers weren't the ones buying or 'hoarding' these houses.

As I've explained, the current recession (or at least the severity of it) could have been avoided if some of my views were mainstream;

You have a totally warped view of economics, your ideas would cripple the economy. They would literally send us backwards into oblivion. You question capitalism over bartering for goodness sake.

Also, you complain that people saw property as an investment...

Before you elaborate... No. I don't complain about that. I pointed it out.

blaming those who viewed houses as money-making opportunities and then castigating those of us who don't view them as that as being "backward".

Quote? That isn't what I said. Read the post.

The public might have pushed the price up, but the lie that there wasn't sufficient units has been blown to pieces.

It was well reported that we could not go on building 70,000 houses a year. It was common sense. The government, the banks, and the devlopers knew this - so they deserve blame. But the people who actually pushed the prices up, as you say yourself, the private mortgage holders, they knew it too. And they need to take blame, and with that, responsibility.

jimmycrackcorm

Had the government taken action to stem the construction bubble they would have been held responsible for directly causing the subsequent crash ( as opposed to the world financial crisis having taken effect ). You're damned if you do and damned if you don't.

digme

Seems taking down countries has become a new hobby for goldman sachs...
bye bye greece and hello Italy, your next.

hallelujajordan

Liam Byrne wrote: »

If a house is worth it to the owner then there's no point complaining that it's now worth less in monetary terms. It's a home - you use it as needs demand, and you get what you can for it later. If it weren't viewed as an investment that will somehow earn you more money than you paid for it down the line, then we wouldn't be in this mess.

You buy a car because you need it. You use it. You later sell it for whatever you can get, and you expect it to be worth less.

If that were how houses were viewed, then we'd all have had more of a realistic view.

Wow . . Is that really what you believe ? Can you not see the difference between a car investment and a property investment . . ??

Let me point it out to you . . . If I spend 30k on a car, it is not unreasonable for me to expect it to devalue over time and write the loss off over a relatively short period. . so I can be happy enough to sell the car 3 years later for 15k . . and buy another one . . .

Can I say the same for my home . . If I spend 300k on a house, can I write that loss off over a similar period ? With your model, no-one would ever be able to trade up from their first home as their family grows ? And what happens if you need to move location for whatever reason ?

You also ignore the fact that negative equity does affect people who are not planning to move house . . . What happens when you're ability to pay your mortgage reduces either through changes in interest rates or in your employment status . . not so bad if you are in a positive equity situation but a debt trap if you are not . . . What happens when you want to take out finance to buy a new car (or whatever) and the bank refuses due to your equity situation ?

Your overly simplistic view on some of these topics puzzles me and does not stand up to scrutiny.

Liam Byrne

hallelujajordan wrote: »

Wow . . Is that really what you believe ? Can you not see the difference between a car investment and a property investment . . ??

Your overly simplistic view on some of these topics puzzles me and does not stand up to scrutiny.

OK - can I point something out before I get squeezed between the two viewpoints ?

Firstly, I said that IF people viewed houses like that - or even a little like that - they wouldn't have been conned into paying far too much.

Viewing houses as investments is what got us into this mess; I was suggesting an alternative view which I know is imperfect but if we were a little more like that the mess wouldn't have occurred.

Houses WILL go up in value - mature gardens, bits added, etc are all added value.

But they should not be allowed / assumed to go up for no reason.

I think I said earlier that if they were worth roughly the same amount paid for them that we would be best off.

Secondly I do take the point re negative equity, however I was attempting to nip in the bud any claim re bailing out people who simply paid too much or took out a foolish 100% mortgage and are now in negative equity. It is an issue for them, not for the rest of us - just like foolish bank and developer loans should be.

The interest rate rises (which Red Marauder seems to not have heard of : http://www.rte.ie/news/2010/0129/permanent.html ) and extra taxes imposed on us are of bigger concern to me, because they mean that people who took on a certain amount, without being greedy and in good faith, are now being hammered, even though they are the ones who were sensible.

Laminations

hallelujajordan wrote: »

With your model, no-one would ever be able to trade up from their first home as their family grows ?

Is it not the case that people can 'trade up' in the car market which has depreciation like in Liams 'model'. I dont completely agree with Liam but i do agree with him that we SHOULD make a distinction between company shares and houses. The government had the power to regulate the property market- to increase or decrease the appeal and ease with which people could 'invest'.

We also all need to define what we mean by bust. Developers going bust are to be given more loans? What about individuals? Also does bust mean moving to the states into your 'wifes' million dollar apartment?

del_c

Your overly simplistic view on some of these topics puzzles me and does not stand up to scrutiny.
******
I'm afraid that you hallelujajordan are the one who has got it all wrong, because you persist with this irish/english point of view that buying a house and selling it on a few years later is an example of "capitalism" at work. Why should this be the case? Why should a house go up in value over and above inflation when there is plenty of land around to build on.

In Germany and most other developed countries, when people buy a house, they EXPECT it to be worth less a couple of years later, for the simple reason that the house is older, it will be less well insulated, newer houses are being built all the time etc etc.

A house for yourself is not be investment, it is a good being consumed over time like anything else as it needs maintenance and constant improvement....not forgetting the rent you have to pay on the money you used to buy it (AKA Interest). At best it is a vehicle which compels you to pay money into a mortgage every month, so that at the end of 20 or 30 years you will have an asset to your name, sort of an ersatz for a pension or savings fund. It is definitely closer to a car, than a classic investment on which you make a return.

When you invest in company shares or bonds, this money is used for plant or equipment which the organisation employs to increase efficiency. This money produces a return on investment which filters back to you in terms of an increase share price for the company, dividends or whatever.
Please countrymen, kick the property habit, which has swallowed so much of the nations wealth in the last years. Now that Ireland is such an expensive place to buy in by international standards, there will NEVER NEVER NEVER again be the steady increase in property value which was seen in Ireland over the last 25 years.

Red_Marauder

Liam Byrne wrote: »

The interest rate rises (which Red Marauder seems to not have heard of : http://www.rte.ie/news/2010/0129/permanent.html )

No, I'm talking about this quote

however these people are now hammered by extra taxes, increased interest rates due to mismanagement by the banks

Please explain what the increased interest rates are? Interest rates have absolutely plummeted, even with the minor pTSB adjustment, so can you explain what you mean when you say "these people are now hammered by [...] increased interest rates due to mismanagement by the banks".

Furthermore, I would again ask you what you mean when you say that these private mortgage holders paid for recapitalisation of the main banks.

Liam Byrne

Red_Marauder wrote: »

No, I'm talking about this quote
Please explain what the increased interest rates are? Interest rates have absolutely plummeted, even with the minor pTSB adjustment, so can you explain what you mean when you say "these people are now hammered by [...] increased interest rates due to mismanagement by the banks".

Interest rates "have absolutely plummetted" since the crisis began ?

That's news to me!

Unless, of course, you're trying to minimise "the minor pTSB adjustment" by making it look like it's part of an overall, longer-term rate ?

Yes, I'll admit that I should have included insurance costs and other fees that are also down to mismanagement by the banks and insurance companies.

Happy now ?

It's the same point, and the same mismanagement, and it has the result that the ordinary householder is being hammered.

- VHi up by something like 40%
- House Insurance up 20%
- Car Insurance up by 20%

Red_Marauder wrote: »

Furthermore, I would again ask you what you mean when you say that these private mortgage holders paid for recapitalisation of the main banks.

EVERYONE is paying for the incompetence and greed of the few - INCLUDING these "private mortgage and other loan holders".

Red_Marauder

del_c wrote: »

In Germany and most other developed countries, when people buy a house, they EXPECT it to be worth less a couple of years later

Germany didn't see a re-sale increase because they didn't have a property bubble. So any new houses that were built deflected capital away from second hand homes.

You are very incorrect in saying it is the case in most other developed countries.
Germany and Japan are in the extreme minority.

Graph, HPI: USA, Europe. 2004.1 - 2008.4

These indices relate to re-sales, what you say is incorrect.

Liam Byrne

Red_Marauder wrote: »

Germany didn't see a re-sale increase because they didn't have a property bubble. So any new houses that were built deflected capital away from second hand homes.

Which is the way it should be.

I love the sneery phrasing, though......would you say that "new cars deflected capital away from second-hand ones ?" I'd say "people chose to buy new ones", but then I live in the real world.

Because to me, logic would mean that it would be acceptable to say the reverse, but not that way around.

And "they didn't have a property bubble"......imagine that! They managed not to have the ill-advised fiasco that we had. I wonder why ? Maybe it's because they viewed it this way, with common sense prevailing ?

Red_Marauder wrote: »

You are very incorrect in saying it is the case in most other developed countries.
Germany and Japan are in the extreme minority.

But you've proved the point. They might be in a minority, but they avoided the property bubble that landed us in the ****.

And as I've said before, your contradictory stance is nuts! You complain that people view things as they do and say they should accept responsibility for their mistakes, but when I suggest an alternative view (one that obviously avoids the bubble, judging by Germany's experience), you ridicule it.

Red_Marauder

Liam Byrne wrote: »

Interest rates "have absolutely plummetted" since the crisis began ?

That's news to me

What planet are you living on? 85% of mortgage holders are on variable or tracker rates and have seen their interest rates fall significantly. If this is news to you then I suggest you read the papers.

On the issue of your suggestion that private mortgage holders are paying for recapitalisation, I would like you to be more specific, what "other fees"? Explain what you mean when you say mortgage holders are paying for it.

del_c

Red_Marauder wrote: »

You are very incorrect in saying it is the case in most other developed countries.
Germany and Japan are in the extreme minority.

Graph, HPI: USA, Europe. 2004.1 - 2008.4

These indices relate to re-sales, what you say is incorrect.

That's a nice looking graph alright, but
A 3% increase in a year over 8 years, would have had the price indexed at around 130 anyway, which would correspond to inflation.

In order to get a clear picture of what I am saying you would need to take the bubble countires out of these number....looking at prices that are clearly in a bubble is hardly realistic. To do this you would need to take out Ireland, the UK, Spain, Portugal, and a number of the Easter European states....but you are still left with most of europe in the normal category: Nordic States, Low Countries, France(though it was indirectly affected by the bubble in england) , Austria etc...hardly an extreme minority.

You would be left with an index of increase for these countries of 3-5%....which I would say is exactly what I had said orginally.


You still haven't answered my main point, which is. Why should property prices increase over and above the normal rate of inflation when "investing" more money in its property in no way contributes to the output capacity of a nation, but, possibly, detracts from it?

Why, must this so? What is the rationale behind it?

97i9y3941

oh defo the public do have a role in the crisis,of course denial is a great thing,as pointed out by other posters,some wanted to keep up with the jones and have their two houses,their flash suv,space wagon and the bimbos that had 4 kids with bob the builder who shes now divorceing now since he cant afford to maintain her.

conorhal

I'm reminded of a story that JFK's father Joe used to tell about how he survived the great Wall St. crash.
He told a story about the day he went for a shoe shine outside his building, the shoe shine boy began to give him stock tips and regale him about his portfolio. Joe Kennedy marched back into his building and sold the lot because as he reckoned, when your shoe shine boy is giving you stock tips it's time to sell, the market is beyond over heated.
I’m reminded of that story because a couple of years ago I took a taxi to the airport and was regaled by my taxi driver about stories of his investment properties (properties, not property mind you!) in Dubai. Around the same time my folks needed the exterior of their house painting and were quoted no less then 1,500 euro for the job (it’s a modest 2 storey semi-D about two days work for a pro). It made me to think that, when taxi drivers are property developers and house painters earn senior council at the bar money, now is not the time to be investing in property. Greed overtook far too many people.

Red_Marauder

del_c wrote: »

That's a nice looking graph alright, but
A 3% increase in a year over 8 years, would have had the price indexed at around 130 anyway, which would correspond to inflation.

Inflation wasn't your point. Anyway even when correcting for inflation your post is mistaken but I will come to that soon.

I would firstly remind you of what you posted earlier

In Germany and most other developed countries, when people buy a house, they EXPECT it to be worth less a couple of years later

In order to get a clear picture of what I am saying you would need to take the bubble countires out of these number....

Well of course in any country where resale property prices did not rise, vendors cannot expect increased profits. You can't really be suggesting that you needed to post here to make such a simplistically obvious statement as that? The point is these countries did not include "most other developed countries"

you are still left with most of europe in the normal category: Nordic States

Easily debunked

Look at this graph
http://www.globalpropertyguide.com/assets/img/CO-SEP-F01.gif

Now before you go on to suggest that this doesn't take account of inflation here are some figures of the real price indices within Sweden from 1996 to 2007
Stockholm: 119%
Gr. Malmo: 185%
Gr. Gotenburg: 156%

Link:
http://www.globalpropertyguide.com/Europe/Sweden/Price-History

And the situation in Norway:

The price rise in Q1 2008 was a far cry from the 16.7% (15.4% in real terms) y-o-y rise to Q1 2007. House prices had risen strongly from 2004 to 2007; the over-all house price index rose 10% (9.7% in real terms) in 2004, 8.3% (6.6%) in 2005, 13.3% (11%) in 2006 and 12.3% (11.2%) in 2007.

http://www.globalpropertyguide.com/Europe/Norway/Price-History#

So again, you are wrong.

You mentioned Austria, but again you are wrong

House prices rose in Vienna during the first 9 months of 2008, while prices for the rest of Austria started to slip.

The Vienna residential property price index rose 6.3% (2.5% in real terms) during the year to end-Q3 2008. It rose by 6.2% in 2005, 7.6% in 2006 and 5.7% in 2007.

The index of the ‘rest of Austria’ fell 0.8% during the year to end-Q3 2008 (a 4.3% drop in inflation-adjusted terms). This compares with house price rises of 4.9% in 2005, 3.15% in 2006 and 3.7% in 2007.

Link: http://www.globalpropertyguide.com/Europe/Austria#

You also mention the low countries. But again you are wrong here too. Quite considerably wrong in fact

After several years of rapid price increases, Belgium’s housing market has slowed due to tighter credit conditions. The average price of dwellings in Belgium rose by a mere 5.7% (2.5% in real terms) in 2007. In 2006, dwelling prices rose 13.2% (10.9% in real terms), and in 2005 prices rose 29.6% (26% in real terms).

Link: http://www.globalpropertyguide.com/Europe/Belgium

Why should property prices increase over and above the normal rate of inflation when "investing" more money in its property in no way contributes to the output capacity of a nation, but, possibly, detracts from it?

Oh I'm not here speaking up for the property industry or saying it is correct that it should have money pumped into it. Although you are wrong to say that it in no way contributes to output capacit, that is an aside.

What I am saying is that your claims that house values depreciate in most other countries when adjusted for inflation - is totally false - they rise considerably. I would again bring you back to your intial point and ask you to explain it in light of this post.

In Germany and most other developed countries, when people buy a house, they EXPECT it to be worth less a couple of years later

Red_Marauder

Liam Byrne wrote: »

I love the sneery phrasing, though......would you say that "new cars deflected capital away from second-hand ones ?

As it happens, elminate new cars and second hand cars will depreciate less generally, and some will increase in value, so yes. But that isn't the point as it happens.

Cars are not small houses.

Cost of production makes them more disposable than homes for one thing.
Furthermore, mechanical and technological depreciation play a far more significant role than they do in a home. A ten year old home is nothing as technologically dated or worn down as is a ten year old car.
In fact a ten year old home probably has improvements, maybe has increased in size, is now furnished, and typically has a better developed garden and local community than it had when brand new.

And as I've said before, your contradictory stance is nuts! You complain that people view things as they do and say they should accept responsibility for their mistakes, but when I suggest an alternative view (one that obviously avoids the bubble, judging by Germany's experience), you ridicule it.

For the second time, I am asking you to quote me on this. I complain that people were foolish about their mortgages, absolutely. But I have no problem whatsoever with avoiding property bubbles or adapting the German property model - in fact maybe if frivolous mortgage junkies had stepped back and thought like a German, and said no to begin with, we wouldn't be in this mess.

Liam Byrne

Red_Marauder wrote: »

In fact a ten year old home probably has improvements, maybe has increased in size, is now furnished, and typically has a better developed garden and local community than it had when brand new.

I've already covered this aspect, which OBVIOUSLY adds value.

The problem is / was expecting it to rise automatically when nothing has been done, or just via hoarding it for 12 months before selling it on, just in order to make a killing from a genuine buyer.

Admittedly genuine buyers who should have told these "building touts" to f**k off, but when this goes on unchecked across the board, it makes it impossible not to give in.

Red_Marauder wrote: »

But I have no problem whatsoever with avoiding property bubbles or adapting the German property model - in fact maybe if frivolous mortgage junkies had stepped back and thought like a German, and said no to begin with, we wouldn't be in this mess.

That was precisely my point earlier, and you said :

Red_Marauder wrote: »

You're right, your kind of thinking is exactly what would drive this country back to the iron age.

Liam Byrne wrote: »

As I've explained, the current recession (or at least the severity of it) could have been avoided if some of my views were mainstream; so I don't know how that equates to the iron age.

Now it appears that you're starting to agree with me, however you still claim that the tactics which landed us in this mess are inevitable and desireable capitalism ?

I'm confused now.

I also don't know why you just said "mortgage junkies"; how about "greedy profit junkies" ?

And I'll stand over my point that not everyone did any of the things that you mention.....many people just wanted a home, but were abandoned by FF to the perils of an over-inflated, corrupt marketplace.

kangaroo

Laminations wrote: »

The fact that people were buying up property like hot snots should have triggered alarm bells in the government but instead of cooling the market they introduced policies that heated the bubble - yes other parties were suggesting similar reductions of stamp duty BUT afaik the opposition was against FF tax incentives and loopholes for investors and developers.

I am a floating voter but I thought I'd point out that I recall some parties were saying that there should be bigger cuts in stamp duty. Labour is one that comes to mind. I was actually impressed that Brian Cowen didn't give in to all the demands that much.

There also seemed to be little mention that if a tax such as this was decreased or even abolished, it would be hard to increase it (or re-introduce it) in the future.

And it rarely seemed to be mentioned that if stamp duty was going to be cut, it wouldn't necessarily cut prices much - as people would likely borrow as much as they could (but the money would go to the house seller rather than the Exchequer).

So I think lots of people are to blame to an extent - so many people wanted reductions in stamp duty.

Shea O'Meara

I believe the public are always shouldering the responsibility, that's the issue. We obey the laws, pay the taxes. I don't see how we can be viewed as a separate entity apart from politicians, bankers and businessmen. Since when did the public not have to step up and shoulder the fall out?
As for taking blame, I believe the fault lies in the naive belief that those we vote into office have our best interests at heart. Of that we most certainly are guilty.
The publics role in the economic crisis was one of believing the hype. We are not all economists, investment bankers, policy makers. We elect and in turn hire people to look after such things. Now if we follow their lead and take their advice that makes us gullible because I don't see the state bailing out mortgage defaulters and we, as a nation, begrudge the minimum wage earner and demonise the unemployed. So our role was one of misplaced trust. We are asked to rely on these people and now being condemned for following their lead.

Red_Marauder

Liam Byrne wrote: »

I've already covered this aspect, which OBVIOUSLY adds value.

Your ideas are all over the place.

Most houses were not "hoarded" for 12 months for no improvements. That very minor aspect of the property market offered a negligent influence to the overall economic situation becuase it offered smaller margins than renovation.
It had no significant part to play in the recession we now all have to deal with. It is something a university student might write a rather dull final year thesis on, that's about it.

Let me take you back to your earlier point, that house buyers should expect to see their houses depreciate after living in them. What do you think ordinary decent home owners would think of that? Given that almost every last one of them have made improvements to their homes, and the community has most likely matured, you don't think they deserve a return benefit?

The problem is / was expecting it to rise automatically when nothing has been done

Why?

This happens all the time, it's called free market trading. You see a trend - the graph is rising - and you take a risk that it will continue to rise.

Can you please suggest, specifically what measure a Government should step in to prevent someone buying and then selling without improvements?

And why not extend such measures to all stocks and shares? After all, stock market trading patterns like "hoarding" as you call it can have devestating effects on ordinary individual's life savings or contributory pensions.

when this goes on unchecked across the board, it makes it impossible not to give in.

Don't be ridiculous. It isn't "impossible not to give in". It's very easy. You just say no.

Originally Posted by Red_Marauder
in fact maybe if frivolous mortgage junkies had stepped back and thought like a German, and said no to begin with, we wouldn't be in this mess.

That was precisely my point earlier, and you said :

Originally Posted by Red_Marauder
You're right, your kind of thinking is exactly what would drive this country back to the iron age.

Read the post. You never read posts properly.

That reference to the iron age (if you bother to read the post, but I include the entire context below) was in direct reference to your socialist aversion to liberal free markets based on profit.

http://boards.ie/vbulletin/showpost.php?p=64505567&postcount=3

Originally Posted by Liam Byrne
Some of the views that people have expressed on other threads have made me want to go back to the days of bartering, so that we can let the greedy opportunists rot.

You're right, your kind of thinking is exactly what would drive this country back to the iron age.

Now it appears that you're starting to agree with me, however you still claim that the tactics which landed us in this mess are inevitable and desireable capitalism ?

Seriously, are you reading any of this?

This is the third time I will ask - again - for you to quote me on that. I did not say the promoting a tiger economy in property was wise. I have consistently said the opposite. Nor did I say it it inevitable. I am saying that there are three serious figures of blame, and the public needs to step up to the mark and acknolwedge comprehensively its own significant blame.
Blame of Government is widespread, fine. Financiers and business men are also widely blamed - great. But what about the ordinary mortgage holder, house consumers who partook in this craze of their own volition, paid over and above the values of their investments so foolishly?

These people need to acknowledge blame, learn from it, and pay for it. Just like developers, I feel they have no right whatsoever to expect state aid or mortgage relief unless it is solely in the state's long term economic interests.

Stupidity must not be rewarded unless some other goal of greater importance over rides it in the short term - that's where NAMA comes in.

I also don't know why you just said "mortgage junkies"; how about "greedy profit junkies" ?

No, I was talking about mortgage junkies. People who felt quite wrongly that they had no option but to take out ridiculous mortgages for houses often now worth half that amount.

Mortgage recipients today should have been thinking like the Germans all along. If they did, this mess would never have began.

Liam Byrne

Red_Marauder wrote: »

Let me take you back to your earlier point, that house buyers should expect to see their houses depreciate after living in them. What do you think ordinary decent home owners would think of that? Given that almost every last one of them have made improvements to their homes, and the community has most likely matured, you don't think they deserve a return benefit?

And yet again you're misrepresenting me. I already mentioned improvements and maturing gardens, and of course these add worth.

My point is that a house should not be expected to appreciate for no reason.

Red_Marauder wrote: »

You see a trend - the graph is rising - and you take a risk that it will continue to rise.

Are you again trying to imply that those who bought a home did this ?

Can you please suggest, specifically what measure a Government should step in to prevent someone buying and then selling without improvements?

Red_Marauder wrote: »

That reference to the iron age (if you bother to read the post, but I include the entire context below) was in direct reference to your socialist aversion to liberal free markets based on profit.

Which I do object to when it's based on necessities, yes. If someone adds value to something, they deserve a return. If they don't, then they don't deserve anything.

I'm talking about rewarding effort not just having money.

Dividends, deposit interest, etc are fine, but making a killing at others' expense is not.

Red_Marauder wrote: »

I did not say the promoting a tiger economy in property was wise. I have consistently said the opposite. Nor did I say it it inevitable. I am saying that there are three serious figures of blame, and the public needs to step up to the mark and acknolwedge comprehensively its own significant blame.

And I agree to an extent. But people who wanted homes should not be punished. And despite your lumping everything together and ignoring the fact that everyone has less net / "disposable" income because of the bankers, developers and financiers, they are being punished.

Red_Marauder wrote: »

But what about the ordinary mortgage holder, house consumers who partook in this craze of their own volition, paid over and above the values of their investments so foolishly?

I've covered this. Those who did so out of greed deserve what they get. Those who took out second mortgages and crazy loans, likewise.

Those who bought a home for their families - no.

Red_Marauder wrote: »

I feel they have no right whatsoever to expect state aid or mortgage relief unless it is solely in the state's long term economic interests.

Stupidity must not be rewarded unless some other goal of greater importance over rides it in the short term - that's where NAMA comes in.

NAMA is not in the State's interest. The only way NAMA will work is if house prices rise, thereby making us as uncompetitive and prone to job losses as we were when Dell moved to Poland.

Red_Marauder wrote: »

People who felt quite wrongly that they had no option but to take out ridiculous mortgages for houses often now worth half that amount.

And my point is that if they wanted that house, to live in, and then they can't complain. Except for the FF-imposed poverty based on bailing out the bankers.

If they borrowed within their means and were sensible, and now the Government is penalising them through levies and taxes, then THAT IS NOT THEIR FAULT.

If they overstretched and viewed it as a monetary gain, then I have no sympathy for them.

Is the above that hard to understand ?

Red_Marauder wrote: »

Mortgage recipients today should have been thinking like the Germans all along. If they did, this mess would never have began.

I "thought like the Germans all along". I refused OTT loans. But I'm still only barely getting by now because of the extra costs imposed on me - directly and indirectly - by FF, and the fact that my income has taken a hammering due to economic mismanagement.

Red_Marauder

Liam Byrne wrote: »

And yet again you're misrepresenting me. I already mentioned improvements and maturing gardens, and of course these add worth.
My point is that a house should not be expected to appreciate for no reason.

Well then the point you are making is totally irrelevant to any discourse on property markets. But I will get to that soon.

Firstly, as regards the above quote, you are misrepresenting yourself.

What you said above was not what you are claimed earlier, can you specifically explain "anybody who bought...".

Anyone who bought in order to have a home should realise that - by nature - second-hand items have less value.

You leap from idea to idea incoherently and contradict yourself.

But to now return to the issue of why houses which are not improved have no relevance
The number of houses left untouched before selling for a profit is irrelavant for two reasons.

• Very low incidence of this occurance, due to diminshed returns compared with making improvements
• Houses would not have been sold on for any noteworthy profit unless "hoarded and untouched" over a long period - which was impractical and cumbersome, and, very rare.

If someone adds value to something, they deserve a return. If they don't, then they don't deserve anything.

and here's the contradiction again:

Dividends, deposit interest, etc are fine

and here's a three-fold contradiction...!

I'm talking about rewarding effort not just having money.

Savings interest is just rewarding having money!

but making a killing at others' expense is not.

Where do you think money from dividends comes from?
You think company profits exist in a vacuum that have no relationship with hoarding shares and selling them on?
You think a millionaire or a settled family making a profit on bank savings is unrelated to charging young mortgage holders interest? What are they doing to earn their profits?

The fact is, you cannot apply such wooly, populist, socialist notions to real life economics and trading. We need ruthless, conscience-free, opportunists in business.
I would almost guarantee you that at some stage or another, directly or indirectly, they have been responsible for your pay cheque at the end of the month.

And I agree to an extent. But people who wanted homes should not be punished.

Of course, wanting something is fine. Going out and paying inflated amounts for a property in a tiger economy founded on construction is foolish, but I'm not going to judge. These people simply need to live with the consequences of their actions. If they can keep their houses, fine. If not, fine.

I've covered this. Those who did so out of greed deserve what they get. Those who took out second mortgages and crazy loans, likewise.
Those who bought a home for their families - no.

Do you understand that one does not actually need to buy a home? This is getting back to thinking like a German. Or a Japanese person.

I guess the moral of the tale for everyone is eat sushi and stop being stupid with borrowing money. There is no such thing as being forced into buying a house. It never happened.

NAMA is not in the State's interest. The only way NAMA will work is if house prices rise, thereby making us as uncompetitive and prone to job losses as we were when Dell moved to Poland.

Huge leap. You think a potential rise in house prices will make us un-competitive? Nobody is suggesting an overheated rise. Be specific.

Except for the FF-imposed poverty based on bailing out the bankers.

Again, for maybe the fourth time, explain how recapitalisaton has been paid for by mortgage holders? You don't seem to get this. Also, it wasn't FF-imposed. It was imposed by Fianna Fail, financiers, and the stupidity mortgage holders.

I "thought like the Germans all along". I refused OTT loans. But I'm still only barely getting by now because of the extra costs imposed on me - directly and indirectly - by FF, and the fact that my income has taken a hammering due to economic mismanagement.

Well lets see how sensible you were. Did you pay a price for your home that reflects its real value?

Liam Byrne

Look, you're obviously only interested in scoring points rather than taking any of the items on-board.

The fact is that I've said if we thought more this way then we'd all be better off.

Do we have to think 100% this way ? No.

Providing small dividends or interest as a return for cashflow to a company, or indirectly loans to a third party is not something I view as objectionable.

I've mentioned that already, too.

But no, you claim that that's "contradictory", even though it's something that I have stated that IS fine by me.

Getting a return because you've improved a house is also OK by me.

Expecting the house to jump in value for no reason, and only buying it as an investment to be on a fictional "property ladder" is COMPLETELY DIFFERENT.

But again, you claim that being OK with getting small non-opportunist returns is somehow contradictory with objecting to making a quick buck with zero effort.

The two can co-exist, you know.

Red_Marauder wrote: »

We need ruthless, conscience-free, opportunists in business.

No we don't.

Red_Marauder wrote: »

I would almost guarantee you that at some stage or another, directly or indirectly, they have been responsible for your pay cheque at the end of the month.

You'd be wrong again. You know nothing about my income, so you can't "guarantee" any such thing, so less of the hyperbole, please.

Red_Marauder wrote: »

Well lets see how sensible you were. Did you pay a price for your home that reflects its real value?

I paid a price that I'm happy with, because it's a home. What some auctioneer tells me that it's supposedly worth is irrelevant.

Red_Marauder wrote: »

Again, for maybe the fourth time, explain how recapitalisaton has been paid for by mortgage holders? You don't seem to get this. Also, it wasn't FF-imposed. It was imposed by Fianna Fail, financiers, and the stupidity mortgage holders.

Fianna Fail chose to go ahead with it, and they imposed extra taxes on us to pay for the deficit.

Red_Marauder wrote: »

Huge leap. You think a potential rise in house prices will make us un-competitive? Nobody is suggesting an overheated rise. Be specific.

It's my view that house prices are currently approximately "realistic".

NAMA is paying about 30% more than that.

So they need to rise by about 40% to cover interest and costs.

And in doing so they'll ensure that an Irish person needs to earn significantly more than people in other countries for the "privilege" of having a roof over their heads.

Look, I agree with some of what you say - that those who viewed things incorrectly were stupid.

But lay off trying to imply that we all were. You're wrong. Accept it.

And stop trying to discredit my views by saying that unrelated parts are somehow contradictory.

I'm OK with dividends and interest. I'm OK with small, genuine returns on investments. I'm OK with returns, mark-up and profits for added value or effort.

I'm not OK with manipulating a genuine supply-and-demand market so that prices go crazy. I'm not OK with ineffective and non-existing regulation. I'm not OK with screwing with people's lives to make a massive profit.

There is no inherent contradiction.

Red_Marauder

Liam Byrne wrote: »

Getting a return because you've improved a house is also OK by me.

Expecting the house to jump in value for no reason, and only buying it as an investment to be on a fictional "property ladder" is COMPLETELY DIFFERENT.

You do realise that most developers involved in second hand homes were buy-to-renovate, right?.
I have already explained why short term cold turnover business was very rare, and negligible in numbers.

So how can you have a problem with the majority of re-sale developers if you have no problem with houses being improved for higher value? Surely you don't.

You'd be wrong again. You know nothing about my income, so you can't "guarantee" any such thing, so less of the hyperbole, please.

If you have every worked for private industry, you can either directly or indirectly thank cold blooded opportunism and the world of business for getting your pay cheque.

That is what I am telling you.

Wooly socialism or desisting from earning a profit because of conscience never put any money in the bank.

I paid a price that I'm happy with, because it's a home. What some auctioneer tells me that it's supposedly worth is irrelevant.

That kind of ridiculous attitude is exactly what has been wrong with this country over the past 15 years. people with that kind of thinking are what got this country into the mess everyone else has to deal with.

Fianna Fail chose to go ahead with it, and they imposed extra taxes on us to pay for the deficit.

Firstly, explain what taxes exactly paid for recapiatlisation, and then google "NPRF".

Recapitalisation did not cause the defecit, and I am asking you about recapitalisation.

It's my view that house prices are currently approximately "realistic".

Who cares, that's just figures, and things like that are "irrelevant" right?. As you say...

Liam Byrne wrote: »

I paid a price that I'm happy with, because it's a home. What some auctioneer tells me that it's supposedly worth is irrelevant.

NAMA is paying about 30% more than that.

I'm not batting for NAMA but I would like to point out to you that NAMA will receive a range of different discounts on loans it buys and from what institution so that's not correct - there won't be just one discount figure.

And in doing so they'll ensure that an Irish person needs to earn significantly more than people in other countries for the "privilege" of having a roof over their heads.

Having a roof over your head is not a privilege. Taking out a large mortgage to buy a house, however, is simply a luxury.

I'm OK with dividends and interest. I'm OK with small, genuine returns on investments. I'm OK with returns, mark-up and profits for added value or effort.

Including property developers, then, surely.

You're okay with "small" genuine returns on investments? Why would an invester bother with small returns, it isn't worth a risk for him. This would cause serious economic stagnation. Don't you get it? The risk has to be lucrative.

Incidentally, people all over the country are today earning significant interest on savings they built up during the tiger period, and which were desposited at generous fixed rates.
For example if I invested €100,000 just over a year ago, I could have a profit of about about €16,000 after DIRT in four years based on fixed rate savings just by being rich enough to have money sitting there.

Who do you think pays for my money sitting there? Mortgage holders, just like you. That's why variable and tracker mortgage rates are going to have to rise... to pay depositors thei interest. Do you still have no problems with savings interest?

The problem here is that your loose pink socialism just doesn't fit into the real world. It's all or nothing.

hallelujajordan

Liam Byrne wrote: »

NAMA is not in the State's interest. The only way NAMA will work is if house prices rise, thereby making us as uncompetitive and prone to job losses as we were when Dell moved to Poland.

DELL moved to Poland because the average monthly salary in Poland is $400 compared to an Irish average of about $2000 . . sometimees you just can't compete and it has little to do with government policy or property prices . .

Liam Byrne wrote:

'm OK with dividends and interest. I'm OK with small, genuine returns on investments.

What's wrong with big return on investments ?

Red Marauder wrote:

Wooly socialism or desisting from earning a profit because of conscience never put any money in the bank.

+1

Found an interesting analogy that highlights the problems with Wooly Socialism . .

One day last year a Texas Political Science Professor was teaching his class about the failures of Socialism in world governments. A bright young student arose to challenge the Professor and insisted that Socialism does work in certain areas of the world and indeed is working now in the good ole US of A as well!

The Professor said "Ok class if you all agree we will conducted a live experiment in the merits of Socialism, but you must all agree to accept the results of this experiment". The class all agreed, they were very eager to participate in the Professor's experiment; which was:

1. Quiz on Wednesday, Test on Friday, the grade will be on an average.

If the average score in the class was an A then everyone gets an A.
If the average score in the class was a B then everyone gets a B.
If the average score in the class was a C then everyone gets a C.
If the average score in the class was a D then everyone gets a D.
If the average score in the class was an F then everyone gets a F

2. This experiment in Socialism would last for one month.


The first grade on the Quiz was a B, so everyone in the class got a B. Some of the A students were complaining, but the C students were happy to get a B. The A students started to study less and complain more.

The results of the Test on Friday was a C, now the A students were really complaining to the other students about studying and they were trying to encourage the C students to bring up their grades, but the C students did not respond.

The next week the grades were a C and D, the former A students lost interest and did not bother to study because now there was no incentive for them to excel and the former C students were mad at the A students for not helping the C students with their studies, so the C students just quit studying.

The result was that at the end of the month the whole class got a F. The Texas Professor said, "This is perfect example of how Socialism does not work and why Socialism fails people as a whole!"


We need the A students for society to function . . .

djlinehan

Laminations wrote: »

Based on this subject derailing another thread I thought I'd start this one to discuss the role of the public in the financial melt down. What views have you on individual responsibility?

I think people who overborrowed, overextended themselves with 100% mortgages have to share some of the responsibility, but only a small amount. The financial sector has duties of care and conduct under which they must operate. Advice was given out, subprime mortgages were invented (seems like a sure fire way to lose money), credit checks were not thorough, the financial regulator slept on the job. The media also have responsibility, they fuelled peoples expectations, but in the end, no one forced anyone to buy - they just used extreme powers of persuasion.

The fact that people were buying up property like hot snots should have triggered alarm bells in the government but instead of cooling the market they introduced policies that heated the bubble - yes other parties were suggesting similar reductions of stamp duty BUT afaik the opposition was against FF tax incentives and loopholes for investors and developers. The real supply of housing was hidden so that demand seemed higher than supply and prices kept going up. This was an artificially created market. STILL no one was forced to buy.

So are the public taking responsibility? Some people think not


I think they have no choice but to take responsibility - anyone who owes money and cant afford their house WILL be indebted to the banks for a very long time, their houses will be reposessed and their credit rating will be worth a dump. I wonder what is this acknowledgement of government failure you talk about? What is this acknowledgement of banking failure? Is it simply a speech of regrets? Because so far there has just been saying sorry and golden handshakes. I know if that is the case I'd prefer to be a banker who f***ed up rather than an individual borrower who f***ed up.

No bad credit ratings for failed businessmen or developers? Sure according to some they should be given more loans! And from these loans


So when a developer does it, its ambition for wealth, when an individual does it, its greed. What do you think? I think the public will shoulder their responsibility, I seriously doubt the government, bankers or financial regulator will. But at least they 'acknowledge' their failures, ay? small f***ing comfort

The publics role in the economic crisis is to bend over and not complain about the lack of vasilene

Liam Byrne

hallelujajordan wrote: »

We need the A students for society to function . . .

And where in God's name did I say what we didn't ?

This is getting pathetic.

We need A students, but we need them not to be full of self-interest and greed, or at least to be regulated properly.

I've never even heard of "Wooly Socialism", but does it have anything to do with "Bertie the Socialist" and some of those students sharing losses having previously kept all their profits to themselves ?

Whatever I've suggested might not be perfect, but it's a damn sight better than what FF have presided over and moulded over the last 10 years.

sceptre

hallelujajordan wrote: »

The result was that at the end of the month the whole class got a F. The Texas Professor said, "This is perfect example of how Socialism does not work and why Socialism fails people as a whole!"


We need the A students for society to function . . .

That's an appallingly bad allegory that can only have originally come from one of those jokey emails that people with little imagination insist on reading out at weddings and the like. Waste of electrons I'm afraid.

Liam Byrne

hallelujajordan wrote: »

One day last year a Texas Political Science Professor.....

I almost missed this.......have you seen the election results in Texas ?

The students who supposedly "failed" probably answered "vote Democrat"

On a serious note, however, that's the problem, TBH......who judges what's acceptable ?

If someone makes loads of money, or supports a Government, and breaks the law or gets paid backhanders, the professor can decide to overlook this based on it "affecting his scholarship".

What we need are less corrupt and unbiased professors, rather than more A students.

hallelujajordan

Liam Byrne wrote: »

And where in God's name did I say what we didn't ?

This is getting pathetic.

We need A students, but we need them not to be full of self-interest and greed, or at least to be regulated properly.

I've never even heard of "Wooly Socialism", but does it have anything to do with "Bertie the Socialist" and some of those students sharing losses having previously kept all their profits to themselves ?

Whatever I've suggested might not be perfect, but it's a damn sight better than what FF have presided over and moulded over the last 10 years.

A students = Investors, capitalists, captains of industry who are looking for more than a 'small' return on investment . . The kind of people who, throughout this discussion you have said you don't want . .

Liam Byrne

hallelujajordan wrote: »

A students = Investors, capitalists, captains of industry who are looking for more than a 'small' return on investment . . The kind of people who, throughout this discussion you have said you don't want . .

You do realise that you've contradicted your own argument ?

The story shows how they were working (i.e. putting in an effort) and they stopped that. So they stopped getting a return.

I said earlier that if someone puts in effort and gets a return then it's fair enough.

Also, there wasn't a "limited number of As" in that story which the A students bought up and sold to the E students at a later date, just in order to line their own pockets.

So cutting and pasting from a pathetic, biased and flawed joke email doesn't help your argument in any shape or form.

hallelujajordan

Liam Byrne wrote: »

You do realise that you've contradicted your own argument ?

The story shows how they were working (i.e. putting in an effort) and they stopped that. So they stopped getting a return.

No . . the story shows that when you try to control or minimise their return on investment (e.g. your comments about only 'small' returns being appropriate) then they are less motivated to work / invest and everyone suffers as a result.

Liam Byrne wrote: »

I said earlier that if someone puts in effort and gets a return then it's fair enough.

To be fair, you said it was OK if they got a 'small' return . . and you haven't answered my other question . . What is wrong with them getting a 'large' return ?

Liam Byrne wrote: »

So cutting and pasting from a pathetic, biased and flawed joke email doesn't help your argument in any shape or form.

It might be a simple story but its designed to illustrate a very simple point . . we need capitalists / captains of industry / investors for society to operate . .

As Red Marauder pointed out . . most of our wages are ultimately paid by them.

whynotwhycanti

hallelujajordan wrote: »

DELL moved to Poland because the average monthly salary in Poland is $400 compared to an Irish average of about $2000 . . sometimees you just can't compete and it has little to do with government policy or property prices . .

I'm pretty sure government policy and within that the property bubble had a huge amount to do with the average Irish wage increasig to 2000 a month in a farely short period of time.

del_c

I still cannot and accept the point that a house to live in is an investment and not consumption.

Red_marauder; You are totally rooted in an irish/english experience of capitalism, formed by the property boom of the last 15 years...a german introduced the CEO of Rolly Royce to a conference a couple of years ago, with the introduction "Mr. Rose will now explain to us how you can base an economy on buying and selling houses to each other" cue tittering teutons.....Rose himself later used this quote as being symtomatic of a get rich quick mentality which had taken root in British culture (what you would call capitalism)

You've conveniently used a House Price Index from 2008 at the end of a worldwide asset price bubble to demonstrate that house prices are bound to go up. This is not really fair, is it.

You also maintain that investing money into a house to make improvements and then getting an increased selling price because you made these improvements demonstrates your point....this is obviously nonsense; though I would accept that people make improvements to houses often in their free time, so I suppose you could say, that they were making money on a pastime.

About an area becoming mature, and thus nicer to live in...well that might be the case for ireland over the last 15 years because of the amount of fresh land developed on without any proper social infrastructure...10 years later those areas will be nicer, and prices will be higher, but you have to live in those areas until they improve, so this is not a free lunch either, with under-developed transport infrastructure, lack of schools and so on. So you would expect to pay less to live in an area like this. Once the area improves you pay more to live there. Back to my point that personal property is consumption and not investment (and this point about areas definitely works both ways as they go both up and DOWN in quality)
Regarding the point on somebody putting money in the back and living off the interest, well yes this is an investment, because the back pass on this capital to people who need it; homeowners, businesspeople etc who get it, and are at risk of not paying it back...therefore you charge them rent on the money i.e. interest and a risk premium to cover the possibility od a default...it's the same with shares.

"If you have every worked for private industry, you can either directly or indirectly thank cold blooded opportunism and the world of business for getting your pay cheque"
Actually I am a self employed consultant, who gets his pay cheque because of the value I add every day to the business I work for, not because of some pyramid scheme, which is what the property market became here. And I am most definitely a capitalist.

Liam Byrne

hallelujajordan wrote: »

To be fair, you said it was OK if they got a 'small' return . . and you haven't answered my other question . . What is wrong with them getting a 'large' return ?

If they add large value, then that's OK. If they get a large return - based on the origins of this discussion - for doing sweet feck-all other than buying something and selling it on later, then it's not.....it just makes things more expensive for everybody.

hallelujajordan wrote: »

It might be a simple story but its designed to illustrate a very simple point . . we need capitalists / captains of industry / investors for society to operate . .

No, it's not. Because - as I pointed out - they chose to do less work. And therefore they're not entitled to the same rewards.

hallelujajordan wrote: »

As Red Marauder pointed out . . most of our wages are ultimately paid by them.

Ah, interesting paraphrasing. He didn't say that. He said he could "almost guarantee" that my wages were paid by them, and he was wrong.

hallelujajordan

whynotwhycanti wrote: »

I'm pretty sure government policy and within that the property bubble had a huge amount to do with the average Irish wage increasig to 2000 a month in a farely short period of time.

True, but not from a starting base of 400 a month . . You would have to go back 25 years in Ireland to get to a competitive salary base . .

That's what I mean when I say sometimes you just cannot compete

hallelujajordan

Liam Byrne wrote: »

No, it's not. Because - as I pointed out - they chose to do less work. And therefore they're not entitled to the same rewards.

You are missing the point . . I know they choose to do less work; They do so because you remove their motivation to do so ! Motivation, incentive, financial reward are not bad words y'know !

Liam Byrne wrote: »

Ah, interesting paraphrasing. He didn't say that. He said he could "almost guarantee" that my wages were paid by them, and he was wrong.

Well, only you know what you do . . But I don't think you work in the public sector and I find it hard to see how you (or anyone else's) salary in the private sector cannot be connected back to private entrepreneur's of some description . . Thats why he used the term 'almost' guarantee . . If you want to describe how your salary comes from a different source than most of the rest of us, feel free. .

Liam Byrne

hallelujajordan wrote: »

True, but not from a starting base of 400 a month . . You would have to go back 25 years in Ireland to get to a competitive salary base . .

That's what I mean when I say sometimes you just cannot compete

The 400 vs 2000 is just one factor.

If we had other benefits and met the cost factor halfway, then we might have a chance of competing.

But having a housing market that means you have to earn €1,300 a month net just to pay the overheads certainly doesn't help matters.

Liam Byrne

hallelujajordan wrote: »

Well, only you know what you do . . But I don't think you work in the public sector and I find it hard to see how you (or anyone else's) salary in the private sector cannot be connected back to private entrepreneur's of some description . . Thats why he used the term 'almost' guarantee . . If you want to describe how your salary comes from a different source than most of the rest of us, feel free. .

It's probably because I'm one of those "entrepreneurs" myself; but one who believes in making an OK return without screwing anyone, and as long as I have enough to get by and the customer is happy.

I never said that my income was unrelated to entrepreneurs; I said that it was unrelated to the greedy ones that Red Marauder described.

Or maybe it's those occasional trips I make to Manchester......

whynotwhycanti

hallelujajordan wrote: »

True, but not from a starting base of 400 a month . . You would have to go back 25 years in Ireland to get to a competitive salary base . .

That's what I mean when I say sometimes you just cannot compete

It was the governments job to originally get foreign investment to this country and keep it here. They did a great job throughout the 90s in getting this investment here but did absolutely terribly in keeping it here due to their policies during 2000's. I know we cant compete with Poland, obviously, but we couldnt compete with Poland ten years ago. That didnt stop huge investment pouring into this country but after the property bubble and the subsequent recession, all the hard work in getting this investment to Ireland has been futile. We lost sight of the bigger picture for short term gain. We had Irelands future blossoming infront of us but couldn't let it mautre naturally, we had to force it and look where we are now. I have brothers who work and live abroad and they still hear about us in the interantional news. We are an example to the world of how not to do things

Shea O'Meara

The public's role in the economic crisis...

"...income generated and investments undertaken in Ireland between 2000 and 2008 concludes that two thirds of the €255bn pumped into the economy during the period was spent building houses."
http://news.eircom.net/breakingnews/17336425/

....not a very big one.

hallelujajordan

whynotwhycanti wrote: »

It was the governments job to originally get foreign investment to this country and keep it here. They did a great job throughout the 90s in getting this investment here but did absolutely terribly in keeping it here due to their policies during 2000's. I know we cant compete with Poland, obviously, but we couldnt compete with Poland ten years ago.

So, it has nothing to do with Poland joining the EU and offering huge (and legally questionable) incentives to attract DELL away from Ireland ?

whynotwhycanti wrote: »

That didnt stop huge investment pouring into this country but after the property bubble and the subsequent recession, all the hard work in getting this investment to Ireland has been futile.

Why is it futile ? We still have a huge amount of FDI in Ireland and very attractive corporate tax rates. . We will, of course lose out to lower cost economies like Poland and India in the same way as every other Western country is losing out to the emerging nations who have extremely low cost bases and a growing and educated workforce.

The government did a wonderful job in attracting FDI to Ireland and are now working to shift the investment to a higher skilled (less easily replaced) workforce.

hallelujajordan

Shea O'Meara wrote: »

The public's role in the economic crisis...

"...income generated and investments undertaken in Ireland between 2000 and 2008 concludes that two thirds of the €255bn pumped into the economy during the period was spent building houses."
http://news.eircom.net/breakingnews/17336425/

....not a very big one.

Houses that, by and large were bought by the public

Liam Byrne

hallelujajordan wrote: »

The government did a wonderful job in attracting FDI to Ireland and are now working to shift the investment to a higher skilled (less easily replaced) workforce.

On what planet is this happening ?

hallelujajordan

Liam Byrne wrote: »

On what planet is this happening ?

Right here on Planet Ireland. .

http://www.taoiseach.gov.ie/attached_files/BuildingIrelandsSmartEconomy.pdf

It doesn't happen overnight but this government has a clear vision of how we need to move in order to sustain the economy. .