Negative equity-Whats the big deal?

srsly78

Yes they should. What goes up must come down, nevermind the soft landing rubbish.

SBWife

KELTICKNIGHTT wrote: »

so your a broker , if so , your part of the problem

that doesn't answer the question, should people have predicted almost 50-60% loss
specially to have all happen in less than 10 yr period to have 50-60% loss, a rescission and loss of income at same time , , Does it ?
now you calling people idiot's who have negative loss in there home, loss of income , interesting
i guess your going to say they also should have guessed that the government bring out all these new taxes , property tax, water charges , septic tank charges the possibility of being force to have private pension which might be proposed to take out 15% of of there wages ?

Please do the other posters a big favour and read your posts before hitting the submit button, given the lack of capitalisation and grammar they're getting hard to understand. Thanks.

I think it was pretty evident (in 2004 - 2007 at least) that these were good times economically speaking. Unless you've never heard of the idea of the economic cycle, the fact that you couldn't turn on the radio or t.v. without hearing of all time lows in the unemployment rate might have suggested that this could increase. That every budget started with the idea of decreasing the tax burden while maintaining the low corporate tax rate. That house prices were hitting and in some cases surpassing levels seen in world class cities. All of this should have been a clue. The evidence was there in spades, just many people didn't want to see it.

KELTICKNIGHTT

SBWife wrote: »

Please do the other posters a big favour and read your posts before hitting the submit button, given the lack of capitalisation and grammar they're getting hard to understand. Thanks.

I think it was pretty evident (in 2004 - 2007 at least) that these were good times economically speaking. Unless you've never heard of the idea of the economic cycle, the fact that you couldn't turn on the radio or t.v. without hearing of all time lows in the unemployment rate might have suggested that this could increase. That every budget started with the idea of decreasing the tax burden while maintaining the low corporate tax rate. That house prices were hitting and in some cases surpassing levels seen in world class cities. All of this should have been a clue. The evidence was there in spades, just many people didn't want to see it.

yes, i heard of economic lol

i was asking other poster should people have know there property would drop 50-60%, did you think it drop that low. some property even dropped lower .
Also with price drop of property of 50-60% plus a recession plus loss of employment, so are you saying people who are in negative value by huge amount and maybe loss of work should have know all this when they got there mortgage
and
to top it off,
the government to bring out property tax, water charges and septic tank charges way back in 2002 ?, are you saying should have known this when they took out there mortgage in 2002 or before ??

The Corinthian

KELTICKNIGHTT wrote: »

so your a broker , if so , your part of the problem

Err, no, I'm not. Not in banking, property, brokerage or anything like that.

that doesn't answer the question, should people have predicted almost 50-60% loss
specially to have all happen in less than 10 yr period to have 50-60% loss, a rescission and loss of income at same time , , Does it ?

Honestly; the drop in price was higher than I thought it would be (25% - 45%), but the recession coinciding with it and the speed of the loss when the bubble burst? That was a no brainer, TBH. Try Googling market bubbles and see what you get (hint: no historical example ever of a soft landing).

i guess your going to say they also should have guessed that the government bring out all these new taxes , property tax, water charges , septic tank charges the possibility of being force to have private pension which might be proposed to take out 15% of of there wages ?

No, but I could and would consider the possibility of these kind of things over a 20+ year mortgage's lifespan. Did you?

clairefontaine

KELTICKNIGHTT wrote: »

yes, i heard of economic lol

i was asking other poster should people have know there property would drop 50-60%, did you think it drop that low. some property even dropped lower .
Also with price drop of property of 50-60% plus a recession plus loss of employment, so are you saying people who are in negative value by huge amount and maybe loss of work should have know all this when they got there mortgage
and
to top it off,
the government to bring out property tax, water charges and septic tank charges way back in 2002 ?, are you saying should have known this when they took out there mortgage in 2002 or before ??

Yes, I think what some people are suggesting is that you treat it like you are going to Paddy Powers, and just act is if it will all fall out of the bottom, assume the market will fall out from under your feet, assume the government will tax the bejeesus out of you, and assume wide spread massive lay offs, as well as a stock market crash, and assume all at the same time. Then assume the ECB will also become insolvent, and will start printing out money like there is no tomorrow so that inflation will make money comical, and also assume petrol will rise to E50 a litre too. Just assume apocolypse will you are taking out your mortgage. Don't leave out the possibility of earthquakes, nuclear war, and terrorist attacks.

TLDR? Assume when you are taking out your mortgage you are committing economic arson on yourself.

KELTICKNIGHTT

The Corinthian wrote: »

Err, no, I'm not. Not in banking, property, brokerage or anything like that.

Honestly; the drop in price was higher than I thought it would be (25% - 45%), but the recession coinciding with it and the speed of the loss when the bubble burst? That was a no brainer, TBH. Try Googling market bubbles and see what you get (hint: no historical example ever of a soft landing).

No, but I could and would consider the possibility of these kind of things over a 20+ year mortgage's lifespan. Did you?

most people with the finance broker would have have allow for maybe 20-25 % but not 60%, no one could, if people knew or though a rescission, huge drop in value by 60% in property , and both to lose there employment plus the new government taxes on property, they would serious consider not buying , even emigrate .
no one could seriously know it get this bad, if people claim they did know it get this bad, they lying.
plus property in few years before big bang or even sooner , property was seriously over valued .

KELTICKNIGHTT

clairefontaine wrote: »

Yes, I think what some people are suggesting is that you treat it like you are going to Paddy Powers, and just act is if it will all fall out of the bottom, assume the market will fall out from under your feet, assume the government will tax the bejeesus out of you, and assume wide spread massive lay offs, as well as a stock market crash, and assume all at the same time. Then assume the ECB will also become insolvent, and will start printing out money like there is no tomorrow so that inflation will make money comical, and also assume petrol will rise to E50 a litre too. Just assume apocolypse will you are taking out your mortgage. Don't leave out the possibility of earthquakes, nuclear war, and terrorist attacks.

TLDR? Assume when you are taking out your mortgage you are committing economic arson on yourself.

price of petrol or diesel has always gone up in good and bad times, thats doesn't have anything to do with value on property lol.
don't do p . power :-)
stock market is connected to banks,
banks where pushing loans on people, even if people couldn't afford ,
the banks went wild during the so called celtic tiger times which i didn't see .

clairefontaine

KELTICKNIGHTT wrote: »

most people with the finance broker would have have allow for maybe 20-25 % but not 60%, no one could, if people knew or though a rescission, huge drop in value by 60% in property , and both to lose there employment plus the new government taxes on property, they would serious consider not buying , even emigrate .
no one could seriously know it get this bad, if people claim they did know it get this bad, they lying.
plus property in few years before big bang or even sooner , property was seriously over valued .

Honestly it wasn't hard to see it was beyond all proportional thinking. I passed by a small plot of crappy land in Dalkey. It might have been 10 square feet with a shack on it and they were trying to sell it for 3 million.

KELTICKNIGHTT

clairefontaine wrote: »

Honestly it wasn't hard to see it was beyond all proportional thinking. I passed by a small plot of crappy land in Dalkey. It might have been 10 square feet with a shack on it and they were trying to sell it for 3 million.

looking back at first post where poster was saying if bought a house for 500k and now worth 300k, poster doesn't see the big deal,
something out of a comic book comment to say.
i don't think most people who house is worth 60% less now would see poster's point,, think if you sell the house to someone i paid 500k and only worth 300k , think they give you 500k, hmmm, don't think so.

clairefontaine

KELTICKNIGHTT wrote: »

price of petrol or diesel has always gone up in good and bad times, thats doesn't have anything to do with value on property lol.
don't do p . power :-)
stock market is connected to banks,
banks where pushing loans on people, even if people couldn't afford ,
the banks went wild during the so called celtic tiger times which i didn't see .

Price of petrol has everything to do with expendible income. More it costs the less you have. Plus it sends the price of goods up because they cost more to transport, and this is in import economy for its goods.

KELTICKNIGHTT

clairefontaine wrote: »

Price of petrol has everything to do with expendible income. More it costs the less you have. Plus it sends the price of goods up because they cost more to transport, and this is in import economy for its goods.

as does everything else. asking people to pay property tax, water charges , when people can barely pay mortgage,
next the government will charge for the air we breath.

clairefontaine

KELTICKNIGHTT wrote: »

as does everything else. asking people to pay property tax, water charges , when people can barely pay mortgage,
next the government will charge for the air we breath.

Dont worry, it's coming.

No doubt there will be garden taxes, child benefit taxes, child support taxes, a hike on sales tax, bring back window tax, shoe tax, toilet paper tax, ,more fines, shorter amber lights so they can have more fines, they will think of any tax they can think of and give you nothing in return, because they have no money and there is no growth. There will be more emigration and more unemployment which means less revenue so more leeching off the people left here who have jobs.

Soon enough they will speed up house reposessions, which will also increase negative equity across the board, but as a result you will see rentals increase, or possibly even more demand for rent allowance and a bigger social welfare bill, and that also means more tax.

skafish

clairefontaine wrote: »

That's fair enough but Ireland should make its bankruptcy laws more akin to the UK or the US.

Why?

Ryder

skafish wrote: »

Why?

easy...why not? Of the various groups in neg equity...you have those with the same salary etc and can, and likely will pay.

The group who have lost jobs and are on the dole....the new insolvency plan will take care of them....i don't think they will be affected

Then you have the large middle group who have jobs but can no longer pay. The new insolvency plan will reduce them to living on the dole for 7years. Where is the incentive to work? I suspect that anyone with transferable skills/mobile will leave and abandon the property. Many who can't leave may just go on welfare...why work for free, so further burdening the tax payer. That's what you get when you apply sticking plaster solutions to systemic problems

SBWife

KELTICKNIGHTT wrote: »

, are you saying should have known this when they took out there mortgage in 2002 or before ??

A property bought in 2002 is not down 50-60% from its purchase price. Most likely given a reasonable down payment and a the principal payments on a 25 or 30 year mortgage such a property has some positive equity. If I recall correctly property prices were pretty stagnant between 2000 and 2002, and I know that my home which I bought in late 2000 has significant amount of positive equity.

The Corinthian

KELTICKNIGHTT wrote: »

most people with the finance broker would have have allow for maybe 20-25 % but not 60%, no one could, if people knew or though a rescission, huge drop in value by 60% in property , and both to lose there employment plus the new government taxes on property, they would serious consider not buying , even emigrate .

A downside of 20% to 25% after a property bubble bursting is pretty optimistic and sounds like the wishful thinking that many were coming out with about 'soft' landings.

But let's consider one simple scenario for a moment; it's 2004, you've got a chunk of change that you can put down as a deposit to buy a two bedroom apartment in Dublin, rather than rent it.

For simplicity's sake, let's sat that around that time, such a place would set you back €300k and prices during the bubble were increasing by 15% p.a. This would mean that in 2005, your apartment would be valued at €345k - and if the bubble were to continue to grow up until today, the same apartment would be valued at the bargain price of €1,055,362.89.

But here's the thing, bubbles do not continue to grow indefinitely. Neither do they simply stop growing and stabilize. They burst. Google it if you don't believe me. And that brings us to the the single biggest presumption (a pretty safe one) eventually the bubble would burst - and let's say that would see a 20% drop in value.

Even given this mythical soft landing, if you bought in 2004 you'd have to keep your fingers crossed that it wouldn't burst until 2006 - otherwise you're in negative equity (€60k if it happened in 2004 and €24k if in 2005).

Presuming, instead, you decide to hold off and pay rent (say a fairly stable €1,500 p.m. as rents really did not change that much, compared to property prices during the same period), you still be better off not buying and instead paying rent for 18 months overall.

And that's with a 20% drop in value when the music stopped, which was wildly optimistic. At 25%, you're already better off buying in 2006 and renting until then; indeed there if you buy 2004 you'd better hope the bubble keeps growing until 2007, otherwise you're going to be in negative equity.

Of course, the media, the bankers, property developers and political establishment were wildly optimistic about what the 'adjustment' that would eventually look like, but that is no excuse to avoid digging further for what is likely to be the biggest financial investment of your life. And it didn't take long to do so; all I needed was Google, a blank spreadsheet and a Sunday afternoon, back in Q4 2004, and I certainly wasn't alone in realizing that:

1. We were not going to get a 'soft' landing; there's never been any 'soft' landing in history and so property values were going to drop by considerably more than 20% or 25%.
2. Given the importance of the property market to the Irish economy, a recession was guaranteed to follow. I would have thought this point would have been obvious, but clearly some didn't join the dots on this.
3. The bubble was not going to continue for another ten years - the hypothetical apartment was not going to end up being worth over a million Euro. Instead the bubble would be very lucky to last five years at best, and in the end it managed to last just under half that before the music stopped.

And that's what it came down to; the music was going to stop, we just didn't know when and what the fallout level would be, but we could slot in a few numbers and see what we came up with.

And when you started crunching the numbers and they began to argue that you needed unrealistically low levels of value depreciation and that the bubble would continue growing for two or three years it didn't make sense to buy to me in 2004.

Now, I don't know when you bought (although if you've lost 60% I suspect you got in late), but this is the kind of research and analysis that many did and as it became increasingly apparent that we were dealing with an economic bubble it became increasingly apparent that the numbers didn't crunch and that the music was going to stop playing before too long.

no one could seriously know it get this bad, if people claim they did know it get this bad, they lying.
plus property in few years before big bang or even sooner , property was seriously over valued .

No one could seriously know it get this bad, but it didn't take a genius to figure out that it would still get bad. Of course, you might be forgiven had you bought in 2001 or 1999, as it became obvious much later, but then again you wouldn't have 60% of the value of your home wiped out if you had.

One thing that stands out in what you've said is that you could never have predicted "in less than 10 yr period to have 50-60% loss, a rescission and loss of income at same time"; you're joking, seriously? A slowdown and/or collapse of the property bubble would result in an effective decimation of an industry that was universally recognised to be the single most important driver of the Irish economy at the time. Oddly, a recession isn't that difficult to expect if that happens and with it harder, at least, times and loss of income. How did you miss that? Seriously?

All the information needed to arrive to these conclusions was online ten years ago and even if you didn't know how to use a spreadsheet to crunch your numbers, that alone should have given people to pause.

If they choose to look, of course - and honestly I think many didn't care to.

clairefontaine

SBWife wrote: »

A property bought in 2002 is not down 50-60% from its purchase price. Most likely given a reasonable down payment and a the principal payments on a 25 or 30 year mortgage such a property has some positive equity. If I recall correctly property prices were pretty stagnant between 2000 and 2002, and I know that my home which I bought in late 2000 has significant amount of positive equity.

The ones bought at the peak have halved, haven't they?

Also, when they start repossessing and auctioning off the homes, increasing the supply on the market, how much further do you see the devaluation going?

What is really sad is the same people who didn't predict it have head off the Australia and guess what's coming, oh no not again!

Ryder

The Corinthian wrote: »

A downside of 20% to 25% after a property bubble bursting is pretty optimistic and sounds like the wishful thinking that many were coming out with about 'soft' landings.

But let's consider one simple scenario for a moment; it's 2004, you've got a chunk of change that you can put down as a deposit to buy a two bedroom apartment in Dublin, rather than rent it.

For simplicity's sake, let's sat that around that time, such a place would set you back €300k and prices during the bubble were increasing by 15% p.a. This would mean that in 2005, your apartment would be valued at €345k - and if the bubble were to continue to grow up until today, the same apartment would be valued at the bargain price of €1,055,362.89.

But here's the thing, bubbles do not continue to grow indefinitely. Neither do they simply stop growing and stabilize. They burst. Google it if you don't believe me. And that brings us to the the single biggest presumption (a pretty safe one) eventually the bubble would burst - and let's say that would see a 20% drop in value.

Even given this mythical soft landing, if you bought in 2004 you'd have to keep your fingers crossed that it wouldn't burst until 2006 - otherwise you're in negative equity (€60k if it happened in 2004 and €24k if in 2005).

Presuming, instead, you decide to hold off and pay rent (say a fairly stable €1,500 p.m. as rents really did not change that much, compared to property prices during the same period), you still be better off not buying and instead paying rent for 18 months overall.

And that's with a 20% drop in value when the music stopped, which was wildly optimistic. At 25%, you're already better off buying in 2006 and renting until then; indeed there if you buy 2004 you'd better hope the bubble keeps growing until 2007, otherwise you're going to be in negative equity.

Of course, the media, the bankers, property developers and political establishment were wildly optimistic about what the 'adjustment' that would eventually look like, but that is no excuse to avoid digging further for what is likely to be the biggest financial investment of your life. And it didn't take long to do so; all I needed was Google, a blank spreadsheet and a Sunday afternoon, back in Q4 2004, and I certainly wasn't alone in realizing that:

1. We were not going to get a 'soft' landing; there's never been any 'soft' landing in history and so property values were going to drop by considerably more than 20% or 25%.
2. Given the importance of the property market to the Irish economy, a recession was guaranteed to follow. I would have thought this point would have been obvious, but clearly some didn't join the dots on this.
3. The bubble was not going to continue for another ten years - the hypothetical apartment was not going to end up being worth over a million Euro. Instead the bubble would be very lucky to last five years at best, and in the end it managed to last just under half that before the music stopped.

And that's what it came down to; the music was going to stop, we just didn't know when and what the fallout level would be, but we could slot in a few numbers and see what we came up with.

And when you started crunching the numbers and they began to argue that you needed unrealistically low levels of value depreciation and that the bubble would continue growing for two or three years it didn't make sense to buy to me in 2004.

Now, I don't know when you bought (although if you've lost 60% I suspect you got in late), but this is the kind of research and analysis that many did and as it became increasingly apparent that we were dealing with an economic bubble it became increasingly apparent that the numbers didn't crunch and that the music was going to stop playing before too long.

No one could seriously know it get this bad, but it didn't take a genius to figure out that it would still get bad. Of course, you might be forgiven had you bought in 2001 or 1999, as it became obvious much later, but then again you wouldn't have 60% of the value of your home wiped out if you had.

One thing that stands out in what you've said is that you could never have predicted "in less than 10 yr period to have 50-60% loss, a rescission and loss of income at same time"; you're joking, seriously? A slowdown and/or collapse of the property bubble would result in an effective decimation of an industry that was universally recognised to be the single most important driver of the Irish economy at the time. Oddly, a recession isn't that difficult to expect if that happens and with it harder, at least, times and loss of income. How did you miss that? Seriously?

All the information needed to arrive to these conclusions was online ten years ago and even if you didn't know how to use a spreadsheet to crunch your numbers, that alone should have given people to pause.

If they choose to look, of course - and honestly I think many didn't care to.

all correct, but a simplistic, retrospective analysis of a complex problem. Like it or not, people within the bubble had to live and didn't have the perspective to see the bubble that it was, and now is obvious. Looking for historical parallels in 2006 would have been a pointless exercise.....how much of history should we expect to repeat itself, and which bits?

Yes, the data, was out there that this was a cyclical event, with a beginning and end. Should the average buyer been able to interpret this? I mean there is plenty of publically available information about healthcare...are doctors no longer responsible for mistreatment, engineers for poor design?

Simplistic analyses do nothing to solve a real problem, and perpetuate the narrative that this is all the individuals mistake thereby guilting them into a debt harness with no gain.....i really think that the majority will see throught that and these insolvency plans will fail

SBWife

clairefontaine wrote: »

The ones bought at the peak have halved, haven't they?

Also, when they start repossessing and auctioning off the homes, increasing the supply on the market, how much further do you see the devaluation going?

What is really sad is the same people who didn't predict it have head off the Australia and guess what's coming, oh no not again!

Working off the CSO numbers, the index peaked in September 2007 at 130.5 the most recent release was for Feb of this year when the index stood at 64.4, so just over 50% decrease.

As for what will happen when the supply increases as a result of repossessions it'll depend on what type of properties come onto the market. There are areas, mainly in Dublin, where there is significant demand for family sized properties in mature neighbourhoods an increase in supply here probably wouldn't have much impact on the market. But there are other estates where the homes really have little value and a couple of repossessions could knock another large chunk off values, if no one really wants to live in an area, what are they doing to pay for a home there, becomes the question?

If the banks are smart they'll more readily move to repossess properties that fit the earlier criteria and be more flexible with homeowners in less attractive areas. But overall my expectation is that while we might see a some further smallish drops in the overall number it'll hide a more and more bifurcated housing market.

The Corinthian

clairefontaine wrote: »

The ones bought at the peak have halved, haven't they?

Overall, the figure appears to be about 60%. Given this, it varies wildly in that properties in south Dublin city have decreased by the smallest amount, around 40%, while some areas, such as those outlying commuter 'towns' have been utterly decimated, with 80% being wiped out.

Other factors also come into play; apartments have lost more than houses overall and estates that were only partially completed or have seen social housing introduced have suffered more than others.

Daft comes out with a regular report that tracks many of these changes.

Also, when they start repossessing and auctioning off the homes, increasing the supply on the market, how much further do you see the devaluation going?

Possibly. It depends on how they're auctioned off and when. Waiting for the market to pick up more and then auctioning them off slowly will likely cause the least damage.

What is really sad is the same people who didn't predict it have head off the Australia and guess what's coming, oh no not again!

There was a thread not too long ago here where someone had left the keys to his home in the door and promptly moved to Australia, where he was in the process of buying. I thought the very same thing as you, when I read the thread.

But what do you expect? There are some who genuinely believe that are blameless; it was the bankers, the property developers, the government or the media that fed the bubble. And as a result, they're unlikely to learn any lesson form the experience.

A collapse of the property market in Australia is likely to make our own look like a minor adjustment.

SBWife

Ryder wrote: »

Yes, the data, was out there that this was a cyclical event, with a beginning and end. Should the average buyer been able to interpret this?

When making arguably the most important financial decision of their lifetime they should at least try to understand the circumstances in which they were acting.

We sold a home after getting married in 2006 everybody said we were insane, I was practically called an idiot to my face, you know what I did, shrugged my shoulders and changed the subject. Sometimes I think about the people who bought the place, they were both teachers this was their first investment property and they were buying because all their friends had investment properties. Now the value of the property is down about 55% below what they paid, I figure the mortgage payments are about €1,900 a month and the rental on the place a €1,000. It's a heavy price to pay for keeping up with the Jones.

Ryder

SBWife wrote: »

When making arguably the most important financial decision of their lifetime they should at least try to understand the circumstances in which they were acting.

We sold a home after getting married in 2006 everybody said we were insane, I was practically called an idiot to my face, you know what I did, shrugged my shoulders and changed the subject. Sometimes I think about the people who bought the place, they were both teachers this was their first investment property and they were buying because all their friends had investment properties. Now the value of the property is down about 55% below what they paid, I figure the mortgage payments are about €1,900 a month and the rental on the place a €1,000. It's a heavy price to pay for keeping up with the Jones.

your last line says it all really....all part of perpetuating the narrative of idiot buyer. Maybe you're right. Either way, we need real solutions or you may find your substantial profit dwindling if the economy continues on its trajectory....unless of course, you've digested the evidence available and have moved all assets outside governmental reach

The Corinthian

Ryder wrote: »

all correct, but a simplistic, retrospective analysis of a complex problem.

First of all, it wasn't actually retrospective - I actually did that analysis (or one very much like it, as I no longer have the original) in 2004.

Secondly, it was only as simple or complex as it needed to be - all I was looking for was a model to estimate whether it made sense to buy or continue renting.

And I was clearly not the only person who did this, nor was it really rocket science to do so.

Like it or not, people within the bubble had to live and didn't have the perspective to see the bubble that it was, and now is obvious. Looking for historical parallels in 2006 would have been a pointless exercise.....how much of history should we expect to repeat itself, and which bits?

So the property bubble in Ireland was the first ever property bubble? STFW, for Christ's sake.

Yes, the data, was out there that this was a cyclical event, with a beginning and end. Should the average buyer been able to interpret this? I mean there is plenty of publically available information about healthcare...are doctors no longer responsible for mistreatment, engineers for poor design?

I've heard the analogy of health care before and it is a false and foolish one.

'Experts' in their fields are not infallible, even doctors. If a doctor told me I had cancer, I would seek a second opinion and perhaps a third. I would do my research and see what courses of treatment are available, instead of blindly accepting whatever I'm told. The doctor (or doctors, given the second and third opinions) would still be more knowledgeable, but ultimately it's my life and ultimately my responsibility to protect and there is always a chance they've got it wrong.

Instead, you're telling us that people buying property had no responsibility to do their homework; to sit down, play Devil's Advocate and look at whether buying was a good idea. To ignore the warnings and rely only on experts whom, at the end of the day, were selling them something. Speaking of warnings here's just a few:

• Property price fall of 30-50 p.c. possible if credit growth not curbed (2000)
• IMF warns that property is overvalued in Ireland (2003 and cited here no less)
• Irish property overvalued according to the Economist (2005)
• Dublin house prices heading for 100 times rent earned (2006)

Now the doctor may still be held to account for mistreatment - or not. Remember, they're held to account only if they have not carried out their work in good faith with all due diligence. Malpractice and mistreatment are not the same thing.

Simplistic analyses do nothing to solve a real problem, and perpetuate the narrative that this is all the individuals mistake thereby guilting them into a debt harness with no gain.....i really think that the majority will see thought that and these insolvency plans will fail

I don't believe that this is "all the individuals mistake". There were numerous points of failure other than those who bought and I agree that how some have gotten off scot free is scandalous.

However, their culpability cannot wipe away the fact that much of this was certainly predictable long before before it happened and that by sitting down back then and doing a bit of research and crunching a few numbers many did realize this. Claiming, as many have, that no one could have foreseen any of this is complete and utter horseshìt, designed to play the victim so that they can avoid the consequences of what were ultimately their choices.

Ryder

The Corinthian wrote: »

First of all, it wasn't actually retrospective - I actually did that analysis (or one very much like it, as I no longer have the original) in 2004.

Secondly, it was only as simple or complex as it needed to be - all I was looking for was a model to estimate whether it made sense to buy or continue renting.

And I was clearly not the only person who did this, nor was it really rocket science to do so.

So the property bubble in Ireland was the first ever property bubble? STFW, for Christ's sake.

I've heard the analogy of health care before and it is a false and foolish one.

'Experts' in their fields are not infallible, even doctors. If a doctor told me I had cancer, I would seek a second opinion and perhaps a third. I would do my research and see what courses of treatment are available, instead of blindly accepting whatever I'm told. The doctor (or doctors, given the second and third opinions) would still be more knowledgeable, but ultimately it's my life and ultimately my responsibility to protect and there is always a chance they've got it wrong.

Instead, you're telling us that people buying property had no responsibility to do their homework; to sit down, play Devil's Advocate and look at whether buying was a good idea. To ignore the warnings and rely only on experts whom, at the end of the day, were selling them something. Speaking of warnings here's just a few:

• Property price fall of 30-50 p.c. possible if credit growth not curbed (2000)
• IMF warns that property is overvalued in Ireland (2003 and cited here no less)
• Irish property overvalued according to the Economist (2005)
• Dublin house prices heading for 100 times rent earned (2006)

Now the doctor may still be held to account for mistreatment - or not. Remember, they're held to account only if they have not carried out their work in good faith with all due diligence. Malpractice and mistreatment are not the same thing.

I don't believe that this is "all the individuals mistake". There were numerous points of failure other than those who bought and I agree that how some have gotten off scot free is scandalous.

However, their culpability cannot wipe away the fact that much of this was certainly predictable long before before it happened and that by sitting down back then and doing a bit of research and crunching a few numbers many did realize this. Claiming, as many have, that no one could have foreseen any of this is complete and utter horseshìt, designed to play the victim so that they can avoid the consequences of what were ultimately their choices.

i never said impossible to predict. I said easy after the event, and probably easy for a few with specialized knowledge and during the by bubble.

Anyway, you and I could circle this for many weeks. The end result will be the same. Negative equity is a huge and growing problem. Up to 60billion at present? None of that is being acknowledged. The solution appears to be to harness mortgage holders to a yoke and presume that they will live in relative penury to pay back a dead asset....in fact in many cases without said asset. Is that realistic....not a chance. With likely rising taxes/ charges and falling income, at best these insolvency plans will need frequent renegotiation to keep the predetermined floor. I even suspect that many will jack in the 9-5 and live off the state/emigrate. Is it possible for you to crunch that for me and let me know the effect on the economy?

Ps, I don't live in Ireland so my only vested interest is to return to a stable economy one day

clairefontaine

Ryder wrote: »

i never said impossible to predict. I said easy after the event, and probably easy for a few with specialized knowledge and during the by bubble.

Anyway, you and I could circle this for many weeks. The end result will be the same. Negative equity is a huge and growing problem. Up to 60billion at present? None of that is being acknowledged. The solution appears to be to harness mortgage holders to a yoke and presume that they will live in relative penury to pay back a dead asset....in fact in many cases without said asset. Is that realistic....not a chance. With likely rising taxes/ charges and falling income, at best these insolvency plans will need frequent renegotiation to keep the predetermined floor. I even suspect that many will jack in the 9-5 and live off the state/emigrate. Is it possible for you to crunch that for me and let me know the effect on the economy?

Ps, I don't live in Ireland so my only vested interest is to return to a stable economy one day

Ok, in fairness you did not need to be an expert to notice what was coming or what was pretty obvious. Believe me I am no economist and my math skills amount to what I can count on my ten fingers, but it was as clear as day to me that this was a fool's game, fool's gold, emperor's new clothes, whatever you want to call it. And people fell hook, line and sinker all because of their huge capacity for denial.

That's not to say teh bankers didnt exploit this, fudge figures, fudge numbers, get in on it etc. And look what they are now, moved from lenders to debt collectors. Must be depressing sitting in a bank all day these days.

Saying that, a solution has to be found that will not bring the whole country to its knees, and begrudgery and a punitive "that's what you get" argument that smacks of Sister Assumpta with her ruler out, is not going to get anyone anywhere.

The government's approach has been foolhardy with its tax tax tax and gouge approach and no sign of growth in sight. Why they rescued from the top down and not the bottom up is something I always wondered. In other words, they pumped the banks with money but not the motrgage holders. Instead gouged the working people, some mortgage holders, some not, and took that money and lent it to the bank. But of course maybe the government needed to do that to make money itself by lending it [money approprated through the USC charge] to the banks. It is near becoming a case of the sorcerer's apprentice where it's hard to scope who is control of what and maybe it just not too big and complex to be in anyone's control.

While people could have predicted the bubble, no one could have predicted the insane USC charges and phenomenal stealth taxes that are cutting into people's ability to pay for their over valued mortgages.

SBWife

They had no choice but to rescue the banks when they did. They were insolvent and the alternative would have been to leave them to fail. If this had happened, I think the 9% GDP decline expected for Cyprus this year would look benign in comparison. However, the bank debt should have been given a haircut at this point rather then essentially being converted into government debt. The original investors in these securities were paid a premium above what government bonds paid to compensate them for the higher level of risk associated. To bail them out at face when things went belly up was a mistake.

The second error was to leave the distressed homeowner situation until now, this has had tragic human costs. I think the PIP seems to be a step in the right direction. I think the 6 year period is about the right amount of time. BUT I'm worried about how the Government is going to police the banks during this period, for example no matter how often the Government push for it lending to small business continues to be less than what's politically wanted.

As for the taxation policy I think if you could have foreseen the unravelling of the property price pyramid you would have expected higher taxes. The stamp duty take in 2006 was €1.6 Billion, these revenues had to be replaced somehow, higher VAT, higher income tax and more stealth taxes were the obvious/only alternative.

ardmacha

While people could have predicted the bubble, no one could have predicted the insane USC charges and phenomenal stealth taxes that are cutting into people's ability to pay for their over valued mortgages.

Given that the government were getting such a large proportion of revenue from stamp duty, this was the easiest thing to predict. Taxes have returned to a 1995-2000 structure, as they inevitably had to.

All of this was predictable enough in Ireland. But the extent of the international mess might have been harder to predict and this is now the dominant problem.

jased10s

so the cost of USC making the home owner not being able to pay their mortgage is a non discussion ?

clairefontaine

jased10s wrote: »

so the cost of USC making the home owner not being able to pay their mortgage is a non discussion ?

It should definitely be part of the discussion.

People seem to be leaving it out though.

As I said already, I have a friend who once hit with the USC -is the amount of one of her mortgages [has two].

The Corinthian

Ryder wrote: »

i never said impossible to predict. I said easy after the event, and probably easy for a few with specialized knowledge and during the by bubble.

It was easy for anyone willing to look is the point. That we were in a bubble was common knowledge, after that figuring out that bubbles burst (hence the name) isn't difficult to discover, as is what happens when it does.

This is not occult knowledge, limited to a few with 'specialized knowledge', it's just a few hours of research on the Web and a little common sense.

Anyway, you and I could circle this for many weeks. The end result will be the same. Negative equity is a huge and growing problem. Up to 60billion at present? None of that is being acknowledged. The solution appears to be to harness mortgage holders to a yoke and presume that they will live in relative penury to pay back a dead asset....in fact in many cases without said asset. Is that realistic....not a chance.

I agree in so far as what you've described is not terribly realistic; more a hysterical sob story.

Prices have apparently stabled and are beginning to increase again, eventually they will climb back to pre-2008 levels, although it may take years, so people are not actually holding onto any 'dead' asset (more hyperbole on your part). The economy will recover. To "harness mortgage holders to a yoke" (even more hyperbole) is not the answer, but neither is this nonsense of bailing them out, because that 60 billion has to ultimately be paid by someone - how about you chew on that reality too?

Ps, I don't live in Ireland so my only vested interest is to return to a stable economy one day

Likewise, so if all the idiots who overextended themselves get bailed out by the tax payer, then it makes little difference to me too - but I'd rather not return some day and find that Ireland has become a nation where we expect to be bailed out by those who less reckless (or lazy); and that is what will happen.

clairefontaine wrote: »

Saying that, a solution has to be found that will not bring the whole country to its knees, and begrudgery and a punitive "that's what you get" argument that smacks of Sister Assumpta with her ruler out, is not going to get anyone anywhere.

The only people suggesting this are those who seem to want to avoid any culpability for their predicament. Unless they get bailed out completely, they're being 'harnessed to a yoke'.

I don't believe that doing that would be practical or beneficial to the economy, but at the same time they do need to accept that they share a large part of the blame for why they're presently in the situations they're in.

Ryder

The Corinthian wrote: »

It was easy for anyone willing to look is the point. That we were in a bubble was common knowledge, after that figuring out that bubbles burst (hence the name) isn't difficult to discover, as is what happens when it does.

This is not occult knowledge, limited to a few with 'specialized knowledge', it's just a few hours of research on the Web and a little common sense.

I agree in so far as what you've described is not terribly realistic; more a hysterical sob story.

Prices have apparently stabled and are beginning to increase again, eventually they will climb back to pre-2008 levels, although it may take years, so people are not actually holding onto any 'dead' asset (more hyperbole on your part). The economy will recover. To "harness mortgage holders to a yoke" (even more hyperbole) is not the answer, but neither is this nonsense of bailing them out, because that 60 billion has to ultimately be paid by someone - how about you chew on that reality too?

Likewise, so if all the idiots who overextended themselves get bailed out by the tax payer, then it makes little difference to me too - but I'd rather not return some day and find that Ireland has become a nation where we expect to be bailed out by those who less reckless (or lazy); and that is what will happen.

The only people suggesting this are those who seem to want to avoid any culpability for their predicament. Unless they get bailed out completely, they're being 'harnessed to a yoke'.

I don't believe that doing that would be practical or beneficial to the economy, but at the same time they do need to accept that they share a large part of the blame for why they're presently in the situations they're in.

you wield logic so powerfully, yet....how do you explain the reality? 100,000 mortgages on arrears, the rate is increasing. Sure, the economy will grow, everything is cyclical.....right? But a rise I. 5 years or 50 years makes little difference to a householder in trouble.

I said earlier that's its not a blame game, yet you keep returning to that point. I get the feeling that you feel people should learn their lesson? Fine....but close to 60billion will need to be found to address this problem, eventually. Every year a solution is delayed, the economy will stagnate make any recovery more difficult. Do you genuinely think that the personal debt/mortgage problem is being addressed?

clairefontaine

I don't think its fair to lay blanket blame without taking into consideration the USC, which has left people struggling to pay mortgages. Blame is not going get people very far and neither is flaggelation.

So the government bailed out the banks, one of which has failed anyway, by lending money to them. This money was taken from people's salaries and they call it the USC. The government will profit [through loans to the banks] from the money they have taken from the people via the USC to bail out banks leaving people unable or struggling to pay their mortgages. This money is taken from those who bought during the bubble, before the bubble, and those who were wise enough to see what was coming and chose not to buy at all. So everyone is getting punished for the banks' recklessness regardless of their risk taking or non risk taking.

Even if people were willfully blind or did not know any better, it is not just the crash of property value that is making things more difficult, but also the government confiscation of salaries via the USC.

So while some responsibility must be apportioned to those who did borrow incredible amounts for shacks on 10 square feet of land with cracks in the walls and ridiculous workmanship, it is far more complex because of the USC and in fairness I can't blame them for wanting some slack or at least some of the money back the government is stealing from them [and the non mortgage holders].

ardmacha

This money was taken from people's salaries and they call it the USC. The government will profit [through loans to the banks] from the money they have taken from the people via the USC to bail out banks leaving people unable or struggling to pay their mortgages.

This is complete and utter nonsense. The USC and other taxes are needed to fund services as there is no longer a large revenue from stamp duty and other property boom related taxation and because many people are contributing less as there is a larger number of unemployed and some people have reduced incomes.

It isn't rocket science, if a large part of revenue is funded from boom related activities then when the boom ends it has to be funded from something else. This is simple normality.

clairefontaine

ardmacha wrote: »

This is complete and utter nonsense. The USC and other taxes are needed to fund services as there is no longer a large revenue from stamp duty and other property boom related taxation and because many people are contributing less as there is a larger number of unemployed and some people have reduced incomes.

It isn't rocket science, if a large part of revenue is funded from boom related activities then when the boom ends it has to be funded from something else. This is simple normality.

The USC is not funding any services other than loans to the banks.

People are still paying PAYE, and PRSI too, now property tax also, plus their own bin charges, plus higher sales taxes and taxes at the pump, solid fuel taxes and carbon taxes. Plus you have to buy your own books for school, plus voluntary contributions, plus you have to pay the fire department if you call them out for a fire, plus poop tax, plus water tax coming up.

It is not paying for services. People are paying taxes as well as private money for services.

Right. They have no money from their over priced stamp duty, gained from their over prices houses, so they are stealing it from paychecks to float the banks.

Whatever the reasons are for it, it still leaves people will less money to pay their mortgages.

The Corinthian

Ryder wrote: »

you wield logic so powerfully, yet....how do you explain the reality? 100,000 mortgages on arrears, the rate is increasing. Sure, the economy will grow, everything is cyclical.....right? But a rise I. 5 years or 50 years makes little difference to a householder in trouble.

I see you're not really taking time to read what I am writing, so I'll try to explain myself once again for you.

I am not suggesting that nothing should be done to alleviate the circumstances of many of those with negative equity mortgages. Neither am I suggesting that they can all be tarred with the same brush or universally 'punished' for their temerity to buy property during a bubble. Please try to dismiss these strawmen from your mind.

Anyone who buys property shares one trait; they are ultimately responsible for their investment. However that is where the similarities end as there were many levels of recklessness that differentiate them:

• Some bought early on, when the word 'bubble' was at best just a whisper. They were diligent when buying, considered all the consequences as far as it was reasonably possible and did not overstretch themselves, yet because of the perfect storm that followed, could not predict the severity of the consequences.
• Some bought later and through herd mentality and fear (of being priced out of the market) overstretched themselves financially, taking on debt that they struggled with during the boom, let alone during a recession. Such was their fear of being left behind that they ignored any arguments against purchase, or often for more modest purchases.
• And some were driven by greed. They bought not solely to live in the properties themselves, but as investments; leveraging themselves to ridiculous amounts in the blind certainty that values would continue to increase and they could make quick profits 'flipping' the properties - until the music stopped one day and they no longer could.

So to begin with not all 'trapped' mortgage holders are the same, and in reality those most negatively affected - who bought late and overstretched themselves the most - are probably those most guilty of being the architects of their fate.

On one extreme you have the defenders against moral hazard, who would refuse any assistance on the basis that such people should sleep in the bed they made. On the other side, you have debtors who absolutely refuse to take any responsibility for their actions and are offended by measures such as the Personal Insolvency Bill on the basis that they feel they should not be made to suffer any of the consequences of their bad investments - after all, they're victims.

So how do you deal with the issue?

I said earlier that's its not a blame game, yet you keep returning to that point. I get the feeling that you feel people should learn their lesson?

I do think this is important, I'm afraid. Not out of begrudgery or spite, but because if you let people off when they act in an irresponsible or anti-social fashion, they end up doing so again. Worse still, those who do act responsibly realize there's no reason not to.

For example, there's been a lot of talk on social welfare payments in recent years; how the system in Ireland actually rewards the indolent and fraudsters. You can remain unemployed indefinitely and often be better off financially than you could if full-time employed.

Meantime, those who work and pay for them receive nothing for their tax - the only real difference is that should they ever need social welfare it's not means-tested (and that testing is a bit of a joke, TBH).

It's a system that has traditionally encouraged people to not work and live of the fat of their working neighbour - a classic example of what happens when 'moral hazard' is ignored.

If we choose to ignore the lesson of the property bubble we condemn Ireland to another bad lesson; where acting irresponsibly is rewarded, as we may keep the spoils when it works out and shirk the consequences when it does not. That is realistically not an option any more than allowing consumption to freeze up.

So any solution ultimately needs to both alleviate the most negative aspects of restricting economic consumption, while avoiding the fostering of culture of social and financial irresponsibility.

So it's not just that one extreme of the debate needs to accept that this is an economic problem that may prolong Ireland's recession if not alleviated. It's also one where the other extreme needs to accept that they share some (and some more than others) of the blame for the mess they and everyone else are in.

How would you balance these two? Or do you even feel that balance is required?

clairefontaine

I think the numbers on depreciation are fictional. They are often based on asking price and not on what they actually sell for.

I know a lady in Foxrock who was offerred E4 million for her house in 2008. She probably get 800k now for it according to her property developer son.

No one is saying there shouldn't be any consequences, but the debate is around what consequences should there be?

The facts are if the government continues to tax the blood out of people's veins, there will be no money for mortgages or anything else for that matter.

That is where the anger should be aimed at, but sometimes I think this country is genetically destined to be subjects.

But if you are going to condemn people for taking responsibility, start with the top down, absolutely no accountability for politicians. It's like nothing matters here for anyone.

There should be more economics in the curriculum, starting in primary. That would be a start to this not happenning again.

The Corinthian

clairefontaine wrote: »

No one is saying there shouldn't be any consequences, but the debate is around what consequences should there be?

Unfortunately there's no shortage of people who are saying there shouldn't be any consequences nowadays:

skyfall2012 wrote: »

I feel these people who have been caught in this mess which the banks created, should get off just like the bankers did, why should they bare the brunt of this mess and bankers get off scott free and get bonuses.

clairefontaine

It doesn't help that the bankers do appear to have gotten off. And I mean APPEAR.

We need to hear more about their consequences, if there are any.

The Corinthian

clairefontaine wrote: »

It doesn't help that the bankers do appear to have gotten off. And I mean APPEAR.

We need to hear more about their consequences, if there are any.

Why? While I agree that if they have 'gotten off' any consequences that it is scandalous and must be rectified (at least for the future), if they have 'gotten off', does that justify everyone 'getting off'?

"Johnny got away with murder, so I should be able to too!"

jmayo

clairefontaine wrote: »

I happen to agree with you on a lot of fronts. I saw it coming too. I never had an interest or hunger for buying a home either. It wasn't just housing, there was an across the board frenzied greed with over inflated prices on everything. I boiled this down to consumer ignorance and the Irish having no economics or fiscal education along side their school curriculums and the first time they had economic prosperity and lost the run of themselves, like a 16 year old handed a platinum credit card.

Agree.

clairefontaine wrote: »

However, what I don't seeing is the dousing of shaming and blaming of people who are paying punitive universal social charges and who just wanted a roof over their heads for their families. Nor do I like seeing the citizens of this country taking out their resentments for paying out for their debts when their grievances and anger [justified imo] should be directed at a government which nationalised private debt and bailed out the banks with tax payer money. Needless to say with the universal social charge, the government isn't "borrowing" the money from its people, paying it back later with interest, it is just taking it so to lend it out at a profit to the banks who took massive risks, committed fraud and cocked it all up with no return to the people it is taking it from.

Don't get me started on the so called establishment, the politicans, bankers, regulators, etc.
I think somewhere along the line I got infracted for suggesting lynchings. :mad:

As for increasing taxes...
Ehh we needed to up taxes and make cuts not because of the banks' bailouts, but because our current budget deficit was through the roof.
You do understand that don't you ?
The bank bailouts/guarantee pushed us into the Troika bailout, but even without it we had to plug the gap in the budget deficit.

clairefontaine wrote: »

While Tom Dick or Harry might resent their neighbours for getting debt relief while they are paying the full course of their debts unaided, they might feel alot worse if a flood of home repossessions available on the market pushes their home into further negative equity.

There you go again with this sh**e about protecting house prices.
An economy does not depend on house prices.
And negative equity is only a problem if you need to sell.

jmayo

hmmm wrote: »

You want people who bought small houses they could afford, to pay more tax so that their neighbours get to continue living in bigger houses they can't afford?

If people don't want to pay their mortgage, and are annoyed about being in negative equity, they can go bankrupt and start over. What is not fair is for them to keep their property and have someone else (who is possibly in a smaller house, or who is renting) subsidise them.

I'm sick of this bleating about people in negative equity. The more you borrowed, and the bigger the house you bought, the more likelihood you are in negative equity. Now you're telling me that their debts are suddenly my problem and I should be paying to maintain the lifestyle they think they are entitled to?

Amen.

clairefontaine wrote: »

That's fair enough but Ireland should make its bankruptcy laws more akin to the UK or the US.

If we make our bankruptcy laws too easy then every tom, dick and mary will try and dump their debts and expect to start again next year.
There are just too many in serious trouble to make it too easy.
The cost would be just too high and as I and other non debt writedown fans point out someone has to take on that debt transfer. :mad:

The Corinthian wrote: »

...
But here's the thing, bubbles do not continue to grow indefinitely. Neither do they simply stop growing and stabilize. They burst. Google it if you don't believe me. And that brings us to the the single biggest presumption (a pretty safe one) eventually the bubble would burst - and let's say that would see a 20% drop in value.

...
Now, I don't know when you bought (although if you've lost 60% I suspect you got in late), but this is the kind of research and analysis that many did and as it became increasingly apparent that we were dealing with an economic bubble it became increasingly apparent that the numbers didn't crunch and that the music was going to stop playing before too long.

No one could seriously know it get this bad, but it didn't take a genius to figure out that it would still get bad. Of course, you might be forgiven had you bought in 2001 or 1999, as it became obvious much later, but then again you wouldn't have 60% of the value of your home wiped out if you had.

One thing that stands out in what you've said is that you could never have predicted "in less than 10 yr period to have 50-60% loss, a rescission and loss of income at same time"; you're joking, seriously? A slowdown and/or collapse of the property bubble would result in an effective decimation of an industry that was universally recognised to be the single most important driver of the Irish economy at the time. Oddly, a recession isn't that difficult to expect if that happens and with it harder, at least, times and loss of income. How did you miss that? Seriously?

All the information needed to arrive to these conclusions was online ten years ago and even if you didn't know how to use a spreadsheet to crunch your numbers, that alone should have given people to pause.

If they choose to look, of course - and honestly I think many didn't care to.

Ahhh FFS stop trying to bring logic into this.
Some of the buyers during the bubble spent more time chosing the furniture and fittings, which all had to be bought immediately on yet more credit, than in actually weighing up the pros and cons of buying.

When the price of property in places like Mayo, Roscommon, Leitrim, etc
was what you would have paid for a house a few years before in Galway city or the outskirts of Dublin (which historically has far more employment opportunties and way better infrastructure than the above areas), then you had to be a muppet to think something wasn't wrong.

Too many people disregarded the elephant in the room and came out with bullsh** about soft landings, how property prices had never dropped in Ireland and how we were different to every other bubble in history.

Ryder wrote: »

all correct, but a simplistic, retrospective analysis of a complex problem. Like it or not, people within the bubble had to live and didn't have the perspective to see the bubble that it was, and now is obvious. Looking for historical parallels in 2006 would have been a pointless exercise.....how much of history should we expect to repeat itself, and which bits?

Do a bit of research and you will see that it wasn't rocket science and one did not need to be a trained economist to notice what was going on.
And even though you may consider it retrospective analysis and being wise in hindsight, some of us did spot the gigantic bubble.

If you trawl back through the famous thread about the bubble bursting in Accomodation and Property forum you will find some arguing strenously that it was a ponzi scheme and they were being lambasted by the bullish outlook of the proeprty cheerleaders, a lot of whom were just ordinary buyers.

Ryder wrote: »

Yes, the data, was out there that this was a cyclical event, with a beginning and end. Should the average buyer been able to interpret this? I mean there is plenty of publically available information about healthcare...are doctors no longer responsible for mistreatment, engineers for poor design?

Do you seriously now argue that people should not be responsible for making informed decisions ?

Ryder wrote: »

Simplistic analyses do nothing to solve a real problem, and perpetuate the narrative that this is all the individuals mistake thereby guilting them into a debt harness with no gain.....i really think that the majority will see throught that and these insolvency plans will fail

Ehhh hello what about a bit of personal responsibilty ?

It is ironic you speak of guilting peope into things when you want to make others eqaully guilty for the mistakes of some. :rolleyes:

clairefontaine

The Corinthian wrote: »

Why? While I agree that if they have 'gotten off' any consequences that it is scandalous and must be rectified (at least for the future), if they have 'gotten off', does that justify everyone 'getting off'?

"Johnny got away with murder, so I should be able to too!"

Well, if you set the precedent you set the precedent. Otherwise it's chaos.

I would like to see Ahern and McCreevy in shared council housing on the dole. That to me would be a fitting consequence.

clairefontaine

jmayo wrote: »

Agree.



Don't get me started on the so called establishment, the politicans, bankers, regulators, etc.
I think somewhere along the line I got infracted for suggesting lynchings. :mad:

As for increasing taxes...
Ehh we needed to up taxes and make cuts not because of the banks' bailouts, but because our current budget deficit was through the roof.
You do understand that don't you ?
The bank bailouts/guarantee pushed us into the Troika bailout, but even without it we had to plug the gap in the budget deficit.



There you go again with this sh**e about protecting house prices.
An economy does not depend on house prices.
And negative equity is only a problem if you need to sell.

Look, it's not the negative equity I have a problem with. It's the taxes and the USC that make it hard to impossible for people to pay what is left of their mortgages.

What I see, not necessarily here on this discussion, is a lot of begrudgery of " if we can pay ours without help than why should others get any help." Well I'll tell you why you might want them to get some help and that is if they default then your house price value may potentially fall even further. Do I mean subsidy by "help" not necessarily, but what I do mean is lay of the taxes and wacky charges because they are inhibiting people's ability to pay for things. Yeah yeah yeah, the government needed the money, well hey, who doesn't need the money? Does that mean you can stick your fingers into people's paychecks and just take what amount you need, when you need it? Of course it does, because deep down we are a nation of serfs.

Some people did not see all the punitive charges coming. Would you give the victims of 911 a lecture on the risks of air travel?

In future I would appreciate a less condescending tone and not refer to what I say as "****e."

jmayo

clairefontaine wrote: »

Look, it's not the negative equity I have a problem with. It's the taxes and the USC that make it hard to impossible for people to pay what is left of their mortgages.

What I see, not necessarily here on this discussion, is a lot of begrudgery of " if we can pay ours without help than why should others get any help."

What do you mean by help ?
What about people who are renting?
Should they be penalised to keep mortgage holders who are in trouble in a home that they cannot afford ?
Should renters help keep property at inflated prices so that they themselves will have to pay even more for a property than it should be worth ?
Should people who are scrimping so that they are paying their mortgage be penalised so that those that aren't get to keep their property ?

clairefontaine wrote: »

Well I'll tell you why you might want them to get some help and that is if they default then your house price value may potentially fall even further.

You have been pedalling a line in this thread about preventing house price drops.
Can't you get it through your head that the property market needs to find it's own level without being interferred with ?
House prices should have been allowed find their own level and then buyers would buy and the market would return to some semblance of normality.
BTW by normality I mean level of transactions not bubble prices. !!

clairefontaine wrote: »

Do I mean subsidy by "help" not necessarily, but what I do mean is lay of the taxes and wacky charges because they are inhibiting people's ability to pay for things.

FFS you sound like a few public servants who have been on complaining they shouldn't have pay cuts because their outgoings are so high.
Your taxes should not be set by your outgoings, but the other damm way around.
Likewise peoples' salaries are not determined on how much they spend.

If the government "lays off the taxes and whacky charges" then where do you suggest they find the money for current expenditure.

Please tell me you are suggesting massive cuts?
Oh wait you wouldn't suggest paycuts (the vast majority of health/education budget) or cuts in social welfare since that would interfere with peoples' ability to pay their mortgages. :rolleyes:

clairefontaine wrote: »

Yeah yeah yeah, the government needed the money, well hey, who doesn't need the money? Does that mean you can stick your fingers into people's paychecks and just take what amount you need, when you need it? Of course it does, because deep down we are a nation of serfs.

Some people did not see all the punitive charges coming. Would you give the victims of 911 a lecture on the risks of air travel?

In future I would appreciate a less condescending tone and not refer to what I say as "****e."

People may not have seen the massive decrease in salaries or increase in taxes, but I bet a lot of the ones in trouble would be that way even if none of the above had happened but interest rates had drastically increased.
Some people borrowed the max with the least amount of leeway for anything negative happening.

And please now stop trying to compare people who overborrowed during a bubble to those misfortunates who happened to have been on a plane highjacked by nutjobs intend on driving it into a skyscraper or the poor souls who just happened to have been working in those skyscrapers.
I won't mention the s word.

You do seem to believe that our only problem has been the bank bailout and appear to have totally forgotten about the budget problems and how it has meant we have had to up taxes, cut expenditure, etc.

Even if we never had a bailout we would have had a massive problem with current budget.
And yes it was all linked to our bloody bubble.

clairefontaine

Ok Jmayo, you don't need to speak to me like that. I am not your daughter or younger sibling you are babysitting.

I am not advocating anything, I am illustrating natural consequences to policy already in place.

If you are happy with the status quo, fine.

Ryder

clairefontaine wrote: »

Ok Jmayo, you don't need to speak to me like that. I am not your daughter or younger sibling you are babysitting.

I am not advocating anything, I am illustrating natural consequences to policy already in place.

If you are happy with the status quo, fine.

its a waste of time responding. peoples views are too entrenched, with the reality - that these debts arent going to be repaid - is ignored. eventually it will become undeniable. personally, i think thats its pointless expecting ireland to solve this. the government needs every bit of income it can get, and as per your example, will rob peter to pay paul. any solution needs to be pan eu.

clairefontaine

Ryder wrote: »

its a waste of time responding. peoples views are too entrenched, with the reality - that these debts arent going to be repaid - is ignored. eventually it will become undeniable. personally, i think thats its pointless expecting ireland to solve this. the government needs every bit of income it can get, and as per your example, will rob peter to pay paul. any solution needs to be pan eu.

It reminds me of the denial that was ago go during the bubble. And now you have the same people in current denial scolding those who were in denial previously.

coolshannagh28

Ryder wrote: »

its a waste of time responding. peoples views are too entrenched, with the reality - that these debts arent going to be repaid - is ignored. eventually it will become undeniable. personally, i think thats its pointless expecting ireland to solve this. the government needs every bit of income it can get, and as per your example, will rob peter to pay paul. any solution needs to be pan eu.

Agree 100 % with this any rational investor allows for a 30% maybe slightly higher fall in their portfolio ,in Ireland assets have fallen by 60 % plus this is wipeout territory and the arrears numbers reflect this . When the government ran with the EU solution and loaded the losses on the taxpayer and bet on world growth instead of structural reform as the solution they made the wrong call . Our economy is in a spiral and debt both public and private is going to sink us . These debts are not going to be paid regardless of the moral hazard handwringing so we may as well get on with the writedowns or bankruptcy or whatever because the next bailout will be to cover these losses like it or not.

skafish

clairefontaine wrote: »

The USC is not funding any services other than loans to the banks.

People are still paying PAYE, and PRSI too, now property tax also, plus their own bin charges, plus higher sales taxes and taxes at the pump, solid fuel taxes and carbon taxes. Plus you have to buy your own books for school, plus voluntary contributions, plus you have to pay the fire department if you call them out for a fire, plus poop tax, plus water tax coming up.

It is not paying for services. People are paying taxes as well as private money for services.

Right. They have no money from their over priced stamp duty, gained from their over prices houses, so they are stealing it from paychecks to float the banks.

Whatever the reasons are for it, it still leaves people will less money to pay their mortgages.

While I agree with a lot of your post, I have to ask, who else should pay the mortgages these people have run up?

A large proportion of homeowners are in negative equity. Most of us struggle to keep up with repayments from time to time, or more often.

However, if we are forced to pay other peoples way as well, it will force a lot of people currently just about coping into default.

And make no mistake, these mortgages will be repaid in full. The only question is who will pay them.

As I see it, and have already posted, there is no simple solution.

However, I for one will not be able to cope with increased taxes, and would be very pi**ed off if I'm asked to pay for other peoples mistakes. Its bad enough that I have neighbors on SW with a higher standard of living than I can afford for my family, paid for by my taxes.
I didn't put a gun to the heads of the muppets who didn't bother to consider the chances of things not continuing as per the boom. as far as i know, neither did anybody else. They are, or were, supposedly mature adults, aware of the consequences of their actions. Basically, they got themselves into the mess, I don't see why I should be expected to bail them out financially.

clairefontaine

skafish wrote: »

While I agree with a lot of your post, I have to ask, who else should pay the mortgages these people have run up?

A large proportion of homeowners are in negative equity. Most of us struggle to keep up with repayments from time to time, or more often.

However, if we are forced to pay other peoples way as well, it will force a lot of people currently just about coping into default.

And make no mistake, these mortgages will be repaid in full. The only question is who will pay them.

As I see it, and have already posted, there is no simple solution.

However, I for one will not be able to cope with increased taxes, and would be very pi**ed off if I'm asked to pay for other peoples mistakes. Its bad enough that I have neighbors on SW with a higher standard of living than I can afford for my family, paid for by my taxes.
I didn't put a gun to the heads of the muppets who didn't bother to consider the chances of things not continuing as per the boom. as far as i know, neither did anybody else. They are, or were, supposedly mature adults, aware of the consequences of their actions. Basically, they got themselves into the mess, I don't see why I should be expected to bail them out financially.

That is my point. They cant cope with the increased taxes which is why they cant pay.

How much more taxes and charges can you take before you cant afford your home? If you suddenly had an extra 200 taken from you every month should you expect a lecture from the holier than thous on this board giving you a spanking and talking to you like you are a 5 year old about how you should have seen it coming?

No I would not think the mortgages should be subsidized through taxes. The banks took the risks too, the banks should take some of the slack.

And if you are worried about negative equity, if they lose their homes your value will most likely drop, unless their are foreigners to buy up the land, foreigners with money .... if I were the government or banks with reposessed assets to sell I'd be looking to Saudi or China. Is that who you'd like to see buy up the property of your evicted neighbors?