Can Ireland sustain its boom?

TomF

I just read an article on the Internet titled, "More 'Can I Help You?' Jobs Migrate From U.S. to India" at the New York Times site (requires registration)
http://www.nytimes.com/2003/05/11/international/asia/11INDI.html?pagewanted=all&position=

The article is chilling to me because it suggests that many Irish jobs responsible for the boom here may be in danger. I wonder how many two-income families are buying overpriced houses in today's Ireland and putting themselves into potentially disastrous situations.

If these families become one-income because of jobs moving off-shore, surely many people will not be able to continue making house payments. When that happens, the bank has the houses and if that happens often enough, the bank is in trouble. Where does it end? Can Ireland sustain its boom and its house price bubble?

Here's an excerpt from the article.

"Much as the exodus of manufacturing jobs abroad did in decades past, sending service or knowledge-intensive jobs to countries like India is causing fears of displacement in the United States and elsewhere.

A study by Forrester Research of Cambridge, Mass., estimated that this type of labor migration, generally referred to as outsourcing if contracted to another company, or offshoring if run by a company itself, could send 3.3 million American jobs overseas by 2015. India, with its large pool of English-speakers and more than two million college graduates every year, is expected to get 70 percent of them."

yankinlk

A mass exodus of Americans is not a bad thing. Nothing would be better than that to re-edumacate the US Society. Teach at least a good few million there is another place on earth besides Hollywood.

As for it happening here I wouldnt know...as Im only a blow in from the "good times - tiger years" I wouldnt be as afraid as the general public is of going back to the bad times. All I can say is what I know from my own experience. I worked in a Multi-National that is in its third (or fourth) round of Redundancies and I have watched office people have to go and get factory line jobs after waiting a year or so for better work to turn up.

I think some wont be able to get back to work, other will have to get creative and change professions entirely. But for the most part it seeems to me, if you really WANT to work there is work out there.

Zascar

Dell already moved most of tech support to india, and there are concerns that some of the salesforce may go too, but its not very likely in the near future. People would not like to but pc's from indians who can barely speak english. As the economy is so tight at the moment, cost cutting can make the difference between sinking and swimming, and you can get a workforce of 100's or 1000's in india for literally 15-20% of the cost. This is especially viable when they are purely an overhead like tech support or customer xervice etc, as they don't make any money...

Victor

Originally posted by TomF
Can Ireland sustain its boom and its house price bubble?

The boom is long gone (certainly in the domestic economy), it is only the export market that is keeping the country going. House price growth is very much in a bubble situation. If the French and German economies get a boost from the flow of money away from the USA and interest rates rise by 2%, then there could be seom gnashing of teeth.

What Ireland can do is keep a steady ticking over of new development, especially in knowledge based business - a step or two above the call centres.

Sparks

House price growth is very much in a bubble situation.

Which prompts the question - what will happen when the bubble bursts? Or will it just slowly deflate?

Captain Trips

Houses will be cheap but mortage rates will go up? In the 80s rates for around 15% or so (according to my parents).

If the French and German economies get a boost from the flow of money away from the USA and interest rates rise by 2%, then there could be seom gnashing of teeth.

The rising euro will stop the flow of money *into* euro countries. Currently the weak dollar is reducing relative costs in the US, although they are massively import dependent (60% of goods).

While we may find we can import goods cheaper (developing a situation that the US has done over the pasy 30 years), the problem is the already large and almost pre-existing unemployment (e.g., Germany). These very large economies (relative to ours) could find it easy to import the goods/services needed due to a strong euro, but the flipside is the reduction in local employment.

I think the US may be better at engineering their economy due to it's centralised yet federal nature. As yet the euro zone trade vs. jobs is quite varied and I am not sure I have faith in EU central bank to have Ireland's interest (no pun intended) at heart.

I don't think the tech market will be down and out completely, but it will simply grow more slowly. The problem is that this steady slow and long-term growth which is more secure will take place in places with cheap employment.

Is Ireland fscked? Yes, but not irrevocably so. Quality of life is still excellent here. Yes it is.

feldy

I cant see the house price dropping too soon as the demand is still through the roof and financial institutions keep throwing out 95% morgages.
I would be a little concerned if i owned a property in the west of the smoke in lucan for eg, (i have a mate who does and he is) with this new adamstown development in the pipeline, that surley will push pricing down out there.
Overall, i think we are screwing ourselves - well i mean the good old political monkeys - and we will soon be dead in the water and a pint of milk will cost 10euros and to go out for a meal, you will need approval from your bank manager.

DeVore

What boom?

DeV.

feldy

Originally posted by DeVore
What boom?

DeV.

what a lot of people seem to forget is that we are still growing year on year, just the "celtic tiger" got fat, and emigrated. either that or he was shot in the head by someone looking to make a rug for thier bathroom.

would you believe that even today, as wonderful as the market is looking, someone out there is making money. Wa*kers. The fat cats keep getting fatter.......:(

Victor

Originally posted by feldy
I cant see the house price dropping too soon as the demand is still through the roof and financial institutions keep throwing out 95% morgages.

I thought the best mortgage you could get was 92-93%, because of stamp duty?

Originally posted by feldy
I would be a little concerned if i owned a property in the west of the smoke in lucan for eg, (i have a mate who does and he is) with this new adamstown development in the pipeline, that surley will push pricing down out there.

There is still too much pent up demand to radically reduce prices. What I would like to see is prices stagnate for 3-4 years. The existing houses in Lucan will be in a slightly different market in any case (semi-Ds -v- apartments and townhouses).

Originally posted by Captain Trips
The rising euro will stop the flow of money *into* euro countries. Currently the weak dollar is reducing relative costs in the US, although they are massively import dependent (60% of goods).

The Dollar / Euro change is (largely) because of the flow from the USA to Europe.

Originally posted by feldy
what a lot of people seem to forget is that we are still growing year on year,

Recent figures were the domestic economy would grow 2.5% this year with consumer inflation at nearly 5%. I know this isn't the full picture, but it is sobering reading.

Captain Trips

Originally posted by Victor
The Dollar / Euro change is (largely) because of the flow from the USA to Europe.

I am not at all convinced this is the case. I would suggest that the exchange rate is due to drop in the dollar as opposed to a rise in the euro. The ECB or E15 countries have done *nothing* to make a strong euro, other than take a softly softly approach. The 10% drop in ST£ and 11% in US$ since Nov 2002 is due to those countries actually doing things politically and globally that the E15 countries simply do not and cannot do over such a short period of time.

For example. The dollar is now weak. So buying US goods is cheap. Japan are scrambling to maintain their status as being *cheaper* and "poorer" in currency comparisons because it maintains exports. Exports mean cash and the US needs that to do it's massive 60% imports.

More Americans will buy American goods because they will be cheaper than the EU goods. A high EUro will without any argument REDUCE our export ability. This will be felt dramatically in countries which depend more on non-Euro countries resulting in higher inflation as we cannot afford to maintain that due to the countries importing our goods not wanting to buy expensively.

Or do you think that a strong euro encourages companies to develop in and buy from us? That simply does not make sense to me. We are screwed because our main trading partners won't be buying. We have increased our own dependency on imports. We had the opportunity to borrow plenty of cash seeing as we had a very low expenditure on loans.

There is no "flow" from the US to E15 countries. The cash in the first place is US cash (or do you see so many US companies setting up in cheap Europe? Or (as is the reality), they pull back and started investing in India, etc., . Or now, because the Fed are so good at this, reinvesting in the US and developing at home because it's cheap to do so with a weak dollar.

The flow of cash, if anything, in summary, is to cheap countries where the $ is worth more and goes farther. That is either in developing countries or in the US now, not the E15.

Victor

A lot of the money moving is Arab money, not "domestic" European / American money.

I wonder how the value of oil -v- Euro is fairing now? (especially compared to what the Americans having been paying).

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1051389956958&p=1012571727143

But the 12 eurozone finance ministers, meeting in Brussels, said the rise in the euro helped to control inflation in the EU and forced exporters to become more competitive.

I suppose one way to check this is to find a graph of how the £, $, € and yen have traded over the last year against the rest of the world. (Can't find any such graphs on ft.com)

ozt9vdujny3srf

I was under the impression that things weren't good, and the "boom" was over with little or nothing to show for it

/me shakes fist a fianna fail

Captain Trips

Yeah, FF should have borrowed a lot while we were the in thing 2-3 years ago. Plenty of then to fix the health service/Kinsale road roundabout

ednwireland

I live in DOnegal and the only new jobs seem to be the current sweat shop (call centres) everything else seems to be closing, only major infrastructural projects seem to be council buildings
the boom lasted about 9 months here

except house prices which seem to be going up and up

devoree's right what boom ( well maybe all you dubs thought it was great)