Some reasons why gloomy forecasts may be wrong

Maple77

Originally posted by David 27 on daft.ie

21 Reasons To Be Positive


1. In the residential property market, price deflation has fallen dramatically - nationwide in Q1 2009 it was -8.3%, Q1 2010 this had fallen to -2.8%

2. Viewing and transaction levels are up significantly on the same period in 2009

3. In the commercial market, the occupier market is seeing an uplift in activity which will translate into improved take up as year progresses

4. Rental levels in commercial are bottoming out

5. ESRI yesterday predicted we are moving out of the recession in 2010, with postive growth emerging in 2011

6. Consumer confidence index up at 61.9 in March from 59.4 in February, and well above record low of 39.6 hit in July 2008, consumers feel more confident a factor which is helping retail sales

7. Total retail sales up 3.0% in volume terms year-on-year in February, first annual increase since January 2008. Apart from the motor industry, Department Stores; Pharmacies, Clothing and Footwear and Electrical Goods all posted healthy year-on-year rises in February.

8. New cars sales up 31% year-on-year in first quarter

9. €81.7bn held on deposit at credit institutions by personal (private households) sector at end-December 2009. Anecdotal evidence suggests consumers taking money out of deposits to spend in recent weeks.

10. Unemployment rate appears to have stabilised at 13.4%, with level of redundancies notified down almost 13% year-on-year in the opening quarter

11. Manufacturing output up 13.8% year-on-year in February, and 10.5% on average in the first two months of 2010.

12. Indigenous (food and drinks) industry posted first annual increase since October 2007, albeit just 0.5%, in February.

13. Trade at Dublin Port (Ireland’s largest port) up for the third month running in February.

14. Merchandise trade surplus of €3,441m recorded in January, €448m higher than in January 2009.

15. Manufacturing PMI above ‘neutral’ level of 50 for the first time in 28 months, in March, at 53.0.

16. Manufacturing export orders running at their strongest rate since PMI survey began in 1998.

17. Service PMI, still below 50 mark, but up at 49.6 in March, its highest level since January 2008, and set to break through 50 in April.

18. Construction PMI still way below 50 level, but March reading of 42.3, the highest since October 2007. Furthermore, the future expectations sub-component, looking a year head, above the 50 mark for the third month running

19. Irish-German 10-year bond yield spread currently at around 140bps, less than half the 288bps peak at the height of the crisis in March last year

20. National Treasury Management Agency has already raised over half its €20bn funding target for the full year.

21. And last but not least the sun is shining

A 22nd is that DAVY REPORT: THE IRISH economy is finally out of recession and returned to growth during the first quarter of the year according to the latest commentary from Davy.

AARRRGH

Our economy does seem to have stabilised somewhat, and anecdotally I've seen an improvement in the recruitment sector.

However, I disagree with the concept that we should be positive - house prices are really overpriced so I would hate to see a halt to the correction.

Victor

However, it is expected to be (initially at least) a jobless recovery.

AARRRGH

Victor wrote: »

However, it is expected to be (initially at least) a jobless recovery.

Who cares? All that matters is being able to buy a three bed semi-d in Offaly for 350k.

SoupyNorman

Here we go again, saying how great(or 'not too bad' in this case) things are is what got us into this mess in the first place. We are still in an extremely precarious situation and indulging ourselves in self propagating facts will not help us at this moment in time.

The nice big statistic we need to see is the years in prison Sean Fitzpatrick and Fingleton et al have received, the settlement in millions of €'s they have made with CAB...I sit here and can feel the anger rising as I think about these arrogant bastards, playing golf, living in thier mansions and driving the luxurious cars. Sure this point has been made umpteen times but I dont care, lets make it again. I know locking these guys up wont make a dent in our fiscal mess but by christ would it appease the general public at large, if we saw Fitzpatrick's house being ceased by CAB I'd be a notch happier

My points may seem a little wayward of the OP's post but I feel these are the issues that need to tangibly tackled before we can go examining figures and crunching numbers.

One of the few things that make me look to the future with an iota of hope is the work of Matthew Elderfield, I hang on his every word and endorse his every action. The tough love this economy needs has begun to be dished out and I felt truly ill with Quinn workers lashing out at the Financial Regulator and not where it should have directed - Sean Quinn.

/Semi-rant FIN

gurramok

1-4, where is your source?
5 - a discredited organisation.
6-7 - jury is still out on this one. I notice volumes may have risen slightly in some sectors but value is down. (weakness of euro may be a godsend for 2010, a plus there)
8 - Scrappage scheme for foreign manufacturers and the lure of a 010 car brings in buyers who have either cash or willing to take out more debt.
9 - Very good, you cannot rely on this for a recovery. It can only go so far.
10 - The oul chestnut of 'stabilisation' when in fact its emigration and back to education which is keeping the numbers down. Its been proven that employment numbers are still sinking(CSO source)
11 - MNC Pharma which does not translate to major job creation
12 - Weakness of euro helps, good news.
13 - 16 MNC Pharma which does not translate to major job creation
17-18 - its a wait and see here. I cannot see it coming from retail, they are been hammered
19-20 It went up recently due to Greece. Its also dependent on how the cuts to PS & welfare are enforced(Croke Park deal) and we still haven't forced through the remaining 4 budget cuts of a few billion a year yet. Don't jump in delight yet as that fiscal balance is nowhere near narrowing.
21- it rained today
22 - Do you believe them? The economy is bound to stop falling at some point, there is still a serious structural deficit to be addressed yet.

Treehouse72

With respect to OP, not one of these points has any hard data on the property market nor a direct causative connection to it. The only one close to it is point 1, which is from the PTSB/ESRI report for Q1 2010, which is so far from "hard" it's not true. And besides, that report showed a 10% fall in prices in Dublin. Since Dublin is by far the most important market in Ireland, that 10% figure is far more significant than the national figure of 2%. And that 10% figure is the most precipitous fall to date - this means the only hard-ish data we have on Dublin says the property crash is getting worse, not better.

No, to me all 21 points are woolly insofar as they relate to the housing market.

For some hard data, here's a report out tonight predicting 40% drops yet to come:

http://www.mortgagebrokers.ie/blog/index.php/2010/05/13/irish-property-investor-report-spring-2010/

And that is a report from mortgage brokers, who are arguing against interest here which is always a sign of truthfulness.

Here is some more hard data directly related to housing:

> There are no less than 300,000 empty units in the country
> There are 500,000 people not working
> NAMA has countless properties (meh, it has loans, but you know what I mean) that it will need to offload at some point
> Credit is still contracting. Of all indicators, this is the key, key one....no variable is as important to house prices as credit. When credit is not there, prices fall irrespective of what else is happening. We could have full employment and tightening credit would still force down prices - that's how important it is. We will never again see as much cheap credit as we did in 2001 - 2008, so it is literally impossible for prices to get back to 2006 levels.
> Taxes are rising, interest rates are rising and incomes are falling. These three things are verifiably happening and all suggest falling spending power.
> Rental yields on both commercial and residential properties are still way, way behind both historical trend and international comparisons.

Fwiw, I am not saying the figures you quote don't matter. Rather, that they will have a minimal effect on the housing market, which is a separate beast ruled by its own universe of variables and indicators, all of which are pointing in only one direction: down.

Piriz

not to mention the 100,000+ in negative equity and the large numbers emigrating (~60,000 last 12 months) which further effects supply and demand.

RATM

Unemployment rate appears to have stabilised at 13.4%, with level of redundancies notified down almost 13% year-on-year in the opening quarter

See there's the fundamental problem right there. When its that high buyers leave the market and sit back even if they have the money to buy. Its the fear of becoming unemployed that stops people buying. And until unemployment comes down to a semi-decent level (even 8% like the UK) you won't be seeing any upward trends in the property market.

Markets are the aggregate sum of the hopes, fears, aspirations and predictions of those who get involved in them. And at the moment none of the above is faring too well.

Senna

Sounds like the usual EA B.S., the market dropped because of fundamental problems with the property market, over supply and over priced. The country coming out of recession wont change those problems, the correction is underway, but still a long way to go.

silverharp

didnt one of the banks come out this week and say that their mortgage arrears are still growing. Hardly a sign of a bottom.

femur61

I dred to think what will happen when peoples start savings to deplete!

who_ru

OP another important economic point that you omitted in your slightly grasping at straws analysis is the 3 billion in spending cuts already being identified by mr. lenihan for the 2011 budget, and make no mistake about it these cuts will happen as the germans are running this economy now hence the requirement to submit budgetory plans to the EU after the Greek bailout.

the germans mean business as far as the "PIGS" are concerned, and failing to cut public spending by countries on an economic lifeline from the EU (Germany) will not be tolerated. so it's more cuts baby and less money circulating.

why oh why can't people just accept that house prices are gettin back to a sustainable level - one that will be good for everyone in the long term.

danbohan

silverharp wrote: »

didnt one of the banks come out this week and say that their mortgage arrears are still growing. Hardly a sign of a bottom.

the really interesting figure would be the amount of people banks have on interest only . mortgage arrears can only continuie to rise in line with intrest rates and a continuing if slowing fall in house prices . their is a concerted effort to talk things up in the economy at the moment a lot of it coming from the same sources that were in complete denial up 2008/9

hopefully for all our sakes they have it right this time , but i for one have yet to be convinced

Treehouse72

Anyone notice that in OP "gloominess" is associated with house prices falling, and "positivity" associated with prices stopping falling?

A perfect example of the still ass-backwards mentality in this country.

So to state it as unequivocally possible: the housing crash is a good thing for our economy and our society. If people get hurt on the way down, that is a shame but they are collateral damage in a nasty but wholly necessary process.

spockety

Treehouse72 wrote: »

Anyone notice that in OP "gloominess" is associated with house prices falling, and "positivity" associated with prices stopping falling?

A perfect example of the still ass-backwards mentality in this country.

So to state it as unequivocally possible: the housing crash is a good thing for our economy and our society. If people get hurt on the way down, that is a shame but they are collateral damage in a nasty but wholly necessary process.

+1

It is utter insanity to associate high cost of shelter and housing with a 'booming' economy.

We need dirt cheap accommodation in order to ensure our money is spent in more productive areas of the economy. The only people who benefit from high house prices are land owners and bankers. The property bubble has sapped the next 30 years of productivity and spend from a significant portion of the population.

Urgh.

femur61

With the increasing number of people returning to education as mature students would keep the unemployment figures stable. Or, are they counted in the unemployment figures?

silverharp

danbohan wrote: »

the really interesting figure would be the amount of people banks have on interest only . mortgage arrears can only continuie to rise in line with intrest rates and a continuing if slowing fall in house prices . their is a concerted effort to talk things up in the economy at the moment a lot of it coming from the same sources that were in complete denial up 2008/9

hopefully for all our sakes they have it right this time , but i for one have yet to be convinced

indeed, i bet there is large enough group that have gone back to IO in order to stay afloat with agreement form their banks, If you have to go to IO then you are only a couple of increases away from getting into arrears.

quozl

Best comedy thread of the month.

Bravo OP.

Zamboni

Slightly OT but I had a look at the OP on Daft and what a very user unfriendly format that board is in!

mathie

Maple77 wrote: »

Originally posted by David 27 on daft.ie

21 Reasons To Be Positive



6. Consumer confidence index up at 61.9 in March from 59.4 in February, and well above record low of 39.6 hit in July 2008, consumers feel more confident a factor which is helping retail sales

7. Total retail sales up 3.0% in volume terms year-on-year in February, first annual increase since January 2008. Apart from the motor industry, Department Stores; Pharmacies, Clothing and Footwear and Electrical Goods all posted healthy year-on-year rises in February.

Does anyone have a rebuttal of these?
They seem fairly sound.

Treehouse72

ed

mrgaa1

it appears that recovery of the economy has slowly but surely started - but reading some of the posts in reply to the OP it appears that some are in "denial" about this. Stop begrudging - admit that things are getting better and that although things are far from perfect it is perfectly ok to be upbeat.

Treehouse72

mrgaa1 wrote: »

it appears that recovery of the economy has slowly but surely started - but reading some of the posts in reply to the OP it appears that some are in "denial" about this. Stop begrudging - admit that things are getting better and that although things are far from perfect it is perfectly ok to be upbeat.

I was contsantly told to stop begrudging in 2005 when I was telling any fecker who would listen that the fake boom was all an illusion and that the whole house of cards would crash and burn. Ditto 2006, 2007 and most of 2008.

And now, after I and others like me have been proven correct, I still have to listen to the same ignorant, patronising accusations from the very people who's behaviour in that period helped get us into this catastrophe.

MrGAA, I have nothing but contempt for your post and I'll leave it at that before I say something that gets me banned.

quozl

mrgaa1 wrote: »

it appears that recovery of the economy has slowly but surely started - but reading some of the posts in reply to the OP it appears that some are in "denial" about this. Stop begrudging - admit that things are getting better and that although things are far from perfect it is perfectly ok to be upbeat.

Do you pay any attention to the news, mrgaa1?

The original post contains half-truths, out-right falsehoods, and spin that a 10 year old should see through.

On the other side, the side with actual verifiable facts, the EU has just escalated from a 40 billion euro greek bailout, to a 110 billion euro greek bailout, to a 1 trillion euro europe wide bailout.

It went from A to B in the space of about 10 days iirc.

Sarkozy threatened to reconsider France's position in the Euro if the bailout didn't go ahead.
The UK finance minister said they wouldn't be helping an EU bailout, and a french minister replied by saying that in that case the UK was on its own if it faces a similar crisis. Which seems very likely considering the heap their economy is in.

We are in the process of doubling our national debt thanks to NAMA, and we have an even higher personal debt burden.

We live in interesting times.

Net Emigration is still high here, and we can thank it for a stable (not even falling) unemployment rate of > 1 person in 8 of working age.

While technically out of recession (because GDP is no longer contracting), there is no growth and more importantly, NO NEW JOBS.

If we were to spend ten years out of recession but without gaining another job compared to where we are now, would you consider this to be a good thing?

I hope you're trolling Bravo either way!

Zamboni

500 steps backwards and now 2 steps forward.

It is far from time to be 'upbeat'.

femur61

mrgaa1 wrote: »

it appears that recovery of the economy has slowly but surely started - but reading some of the posts in reply to the OP it appears that some are in "denial" about this. Stop begrudging - admit that things are getting better and that although things are far from perfect it is perfectly ok to be upbeat.

Things are getting better because they is 20 -50% of everything.

who_ru

ei.sdraob

Maple77 wrote: »

2. Viewing and transaction levels are up significantly on the same period in 2009

says who?

how much is significantly??

based on what independent report???

AARRRGH

ei.sdraob wrote: »

how much is significantly??

From 0 to 1 is a 100% increase.

That's pretty significant!

danbohan

mrgaa1 wrote: »

it appears that recovery of the economy has slowly but surely started - but reading some of the posts in reply to the OP it appears that some are in "denial" about this. Stop begrudging - admit that things are getting better and that although things are far from perfect it is perfectly ok to be upbeat.

thats the same misguided bullsh....t that told us of soft landings , property been outstanding value in 2008 etc , everybody wants to see economy turning , the real economy that is not some idiotic figures from disreputable sources