Irish Property Market chat II - *read mod note post #1 before posting*

Are you on the planet that wants 10% servicing on our national debt leading to increased taxes and decreased spending on infastructure?

i don’t think that’s what anyone wants, but inflation will end up spiralling out of control unless it’s brought back down, it’s going to be painful either way but higher interest rates (now and not later when it’s completely out of hand) are the lesser of the two evils, only this time because of the energy situation it’s going to be extra painful.

Inflation is being caused by higher energy costs. The cost of fuel is leaving the economy. A jump by the ECB to an interbank rate of 10% would not necessarily solve inflation, howe er it would collapse the economy.

10% interbank rate would have a mortgage rate of 12-14%, a business lending rate of 13-16% and a personal lending rate of 15-20%.

Somebody suggesting that the ECB rises interest rates rise to 10% like Nermal suggested has no idea about the effects it would have.

The ECB has been slower to rise rates than other central banks however it has to account for many different economies within the EU

Where did this canard come from, that inflation driven by energy costs cannot be addressed by increasing interest rates? It's simply incorrect.

I'm sure it would be the exact opposite of fine. It's just better than the alternative: letting inflation get out of control, a path which we are well advanced on.

Rising energy costs is the main driver of inflation at present and is not a secondary problem. Just look at the CPI for July YTD

I dis not say it couldn't be but, I said it would not necessarily. The inflation in the early 70 was driven by oil prices. As an economy in the 70's we were less dependent on energy and even though interest rates were quite high hitting 16% and guess what it did not effect oil prices.

It was Nermal suggested the CB should do it. It very hard to slow down or stop inflation when it caused by higher energy costs. The cure can be worse than the problem.

The other thing was during the 70's house prices kept rising faster than people could save a deposit.

It's amazing how some can see the dangers of escalating costs to homeowners, but blind to escalating costs to renters

I think the point is that if IR's were ~10% the capital you would need to borrow would a lot lot less that you would have to borrow now, so that is a pretty pointless comparison to make. Or do you think it IR's were ~10% the prices would be the same as they are now?

Yes what you are saying is 100% true when the ECB was set up managing inflation is and was its original function. It’s failing at its basic mandate.

This was to ensure that the Germans who were savers didn’t end up with an Italian style policy in the ECB.

Managing employment, avoiding recessions is in its mandate but this can’t interfere with preventing inflation. But the reality is that EU has the potential to collapse completely if interest rates are too high due to huge debt burdens so real politic wins out.

https://www.ecb.europa.eu/mopo/intro/html/index.en.html

Nor is it new, PIIGS.

Well Said!

A window into how investment funds buying up property might play out into the future, will be interesting to see if there is any spillover of the problems in USA to Ireland. Many of the same players involved.

Yes I know there are many armchair economists on YouTube, but this guys commentary and concerns have been fairly accurate

I wish he didn't use such clickbaity headlines/images cos his analysis is generally very good.

My grandmothers house (living in it atm) has an old solid fuel stanley range that heats radiators of the whole house. The range also has hot plates and an oven. We use and cut our own turf still but my god when I think how self sufficient we used be. It is totally backwards were heading.

Cut and save your own turf, use the turf to both heat your house, hot water and range used for cooking. Needless to say the chimney will be cleaned and the range will be roaring all winter as I luckily got a fair amount of turf cut this year. Its like they want to take this all away much like the farming so we are totally reliant on the state/big corporations and totally at their mercy.

Summer holidays you say - there will be more summer holidays on the bog for the next few years. Bog tan is always better than the Algarve tan :)