My invitation to the above event at the week-end being unaccountably delayed, it’s interesting to see the Irish Times relaying the views of colleague Professor Terrence McDonough (IT do note correct spelling please.) here.
“He said the country should default on its debt, leave the euro, build a single public bank, provide a jobs guarantee for all workers and nationalise the Corrib gas field.”
106 replies on “United Left Alliance convention”
How many of these people ever created a job or ran a pony show?
Well, none of them destroyed any jobs either, or frequented the Galway tent, so on the whole I think it all evens out.
You’d better remove this post before John McH reads it. 🙂
DEL C:> *.*
No joy 🙂
Its obvious now that the Euro was a credit / production recycling invention , first world core European economies gave peripheral second world European economies credit to buy goodies.
The private credit in Ireland bought BMWs & the public debt in Greece bought submarines.
But this expenditure did not increase total aggregate wealth in the eurozone – it merely concentrated the existing stock of wealth.
A static wealth base cannot service exponential interest forever – therefore we experience a breakdown crisis that will ultimatly effect all countries but over a staggered time period.
Current policy seems to be:
1. Pay all the banks debt and the State debt.
2. Stay in the Euro.
3. Provide a jobs and income guarantee for all public sector workers (Croke Park).
4. Reduce the pay of private sector workers (JLC’s/Sunday work).
5. Bring in the Corrib Gas ashore and give it away for free.
Damned if I know how to choose!
PS blaming the wealthy for being wealthy is a typical leftist postion – they seem not to realise that the wealthy also spend & invest in the country although perhaps inefficiently.
The core problem for Ireland is that its money supply is being drained to service interest on unprofitable & unproductive investments when default & restructuring is needed.
Also a central bank that is extremely hostile to the concept of Goverment money so therefore people have no domestic safety nest other then Gold or foregin accounts.
I do however favour the creation of a state industrial bank that will engage in medium to large scale projects that are revenue neutral in nature – some free marketeers might scorn at this policey but they must realise that engaging in a feverous export drive to service foregin interest is also revenue neutral or perhaps even negative now.
We have experienced a 26% reduction in GNP since Q1 2007 at yet our EU “partners” do not want to play ball.
Its time to fill their greedy mouths with punts now – we have no choice.
Reading the IT’s report – and not just the summary presented here – it appears that some of the ideas advanced are inspired, some are perceptive, while others are economically idiotic.
Among these, the idea of a national bank providing basic banking services on a universal basis – but only if the idea is expanded to include effective advocacy and representation of customers’ collective interests – is inspired. The notion of a strike by capital is perceptive – as is the implied critique of protecting the interests of capital while labour is being annihilated. But the idea of nationalising Corrib is simply off the wall.
While Ireland’s future economic prosperity and well being are being sacrificed to provide Pres. Sarkozy and Chancellor Merkel with an outside chance of re-election, these ideas – good, bad and indifferent – will gain currency.
What exactly is this chap a professor of ? His solution calls for an overnight balanced budget, significant increase in foreign reserves and probable expulsion from the EU (due to the Corrib heist). Vapid, shallow thinking like this usually comes from the celebrity economist.
The only reason why the Corrib field will produce gas is because of the technical expertise that Shell have brought to the project.
Burning Shell now will ensure that none of the multinationals will look at Ireland again. Regardless of how much oil and gas is in Irelands waters, its going to stay there unless these multinationals are enticed in. They have the expertise, not Ireland.
What I would be concerned about is a rise in the extremist left, which could be a serious possibility if the current FG /Labour coalition fails to deliver.
@ Desmond Brennan
“Vapid, shallow thinking like this usually comes from the celebrity economist.”
I think you’re confusing people who provide wizzo-schemes to put things back the way things were, with people who wish to change everything.
Burning Shell now will ensure that none of the multinationals will look at Ireland again.
Not at all borne out by the historical record of such things. Corporations have the attention spans of gnats, apart from prospects of immediate profit.
IMHO the paragraph attributed to Kieran Allen (in the IT article) is a classic.
I must keep keep a wary eye out over my shoulder for the striking “rich capital class” in Ireland. They seem to be equally as good at hiding themselves as fifth columnists were in another era. Maybe I should check under my bed.:)
Nevertheless as someone who is proud of Irish democracy I believe that the United Left Alliance is a welcome addition to the political spectrum and hopefully they will eventually be able to contribute to public debate with ideas and proposals which ordinary voters can consider and then either reject or accept.
Another advantage of the the United Left Alliance is that the political right may also be motivated into organising itself and providing alternative ideas after the present (IMHO unavoidable) coalition manages to “mop up” after Fianna Fail, enabling us to return to healthy debate and politics by June 2014.
An interesting video with a view of protests in Athens that starts at 07.15
Would Iran be an example? From what I know none of the major oil companies have been back after the Iranian Revolution in 79.
There’s a difference between nationalisation & taxing the oil / gas revenue at lets say corporate tax rates.
The level of expertise for offshore operations is beyond us in every practicable way. – how could you nationalise such a project ?
I take your point, however it all depends on the level of investment and the guarantee of return. Make them a deal which is too good to be ignored and they just might be back by your side.
However I believe no major oil company has been willing to invest several billion dollars in politically unstable countries. Several companies have left Nigeria, due to political instability.
In addition international sanctions can be placed on foreign companies trading with rogue states. Of course it depends on who you annoy to be called a rogue state!!
There are other examples, BP did go back into Russia after losing a lot of money the first time. However it depends on the rewards, and how much kissing and making up is accomplised.
@ The Dork
What’s your take on how Norway handled its oilfields?
“Several companies have left Nigeria, due to political instability.”
Do you mean Sean Fitz? Which is the unstable one, us or them? 🙂
From the IT report:
“A further €80 billion was attributable to “the elite’s refusal” to tax itself. “Irish working people and poor people cannot pay, shouldn’t have to pay and sooner or later won’t pay,” he said.”
From The Sunday Times yesterday:
“IRELAND’S seven universities and Dublin Institute of Technology employ 1,001 staff on salaries above €100,000 a year.
Records released under the Freedom of Information act reveal that University College Dublin (UCD) has the most high earners, with 294 staff enjoying six-figure salaries. This means almost one in 10 of UCD’s 3,012 staff (9.7%) are being paid €100,000-plus.”
If Flann O’Brien did industrial relations, he couldn’t have produced a better soup – An Beal Bocht San Bailout
@ Joseph Ryan
Not all public sector workers are covered by the Croke Park Agreement but have suffered reductions in pay. Anyway the Croke Park Agreement won’t see the end of this year.
@ Paul Hunt
“While Ireland’s future economic prosperity and well being are being sacrificed to provide Pres. Sarkozy and Chancellor Merkel with an outside chance of re-election”
Isn’t this the core of the problem? While Merkel and Sarkozy keep attention on Greece, Ireland & Portugal they are hiding the true state of their own banks. They are willing to sacrifice anything to save their own necks.
Well I ain’t no oil expert – but I presume you are talking about their pension fund surplus.
I am not a fan of sovergin wealth / Pension funds – they are a artifact of the post gold standard world.
Although I am in favour of Goverment money creation rather then private money creation, Gold would be needed to balance external trade in a more efficient manner.
The western world would not be subject to gross over investment and underinvestment in such a world in my opinion.
This takeover of domestic utilities is a direct result of this monetory madness – the Greek situation is perhaps the most dramatic example.
Oil is both a blessing and a curse.
@ Paul Hunt
But the idea of nationalising Corrib is simply off the wall
Could you elaborate on this? This isnt something I know a lot about but, I think, its an area you have some expertise in so I would be interested in the reasons
“Vapid, shallow thinking like this usually comes from the celebrity economist”.
Or the DoF. Or Peter Bacon. Or anyone involved at a senior level in Irish finance since 2007 .
How much did NAMA cost ? That bank guarantee was real joined up thinking par excellence.
“Kieran Allen, head of sociology at UCD”
The dead tree media will never tell the public that Mr Allen is the ‘chief theoretician’ (sic) of the SWP secular religious cult.
In the Canadian Province I live in, anyone who makes over 100 grand including overtime from provincial or municipal funds has to have their salary published, whether they be a bus driver, a police officer, a judge or a university lecturer.
Oh and that’s 100 grand Canadian, so in Euro shekels that’s 71 grand (although it has not been indexed since the legislation was first enacted in 1996).
in case linking directly causes hassle just google “Ontario Public Sector Salary Disclosure 2011”
Prof. McDonough said in 2009: “a formal default on the government debt would be disastrous. The only option is to restore balance to the public finances.”
So we agree on that and I assume most people would also agree that the extremes of communism/marxism or extreme capitalism are also not options.
Adam Smith would be in the same boat and he saw self-interest in the context of community and the risks of combinations of employers conspiring to keep wages low.
It may be a comfort to view the Great Recession as a failure of capitalism but the corrupt Wall Street system is not the sum total of capitalism.
In 2009, Senator Dick Durbin of Illinois said in a radio interview: “Hard to believe in a time when we are facing a banking crisis, that many of the banks created, that the banks are still the most powerful lobby on Capitol Hill. They frankly own the place.“
Capitalism is companies like Apple, Samsung and LG trumping once world beaters such as Sony, Panasonic and Nokia, that failed to keep pace with change.
There is no perfect ‘ism’ and the current model of globalisation which hugely benefits developing countries and mainly the owners of capital in developed countries, is unsustainable. The alternative is not to revert to state companies where the main gainers are the self-interested insiders.
Do people still believe the tripe that the primary interest of staff in a state-owned company is always the public?
I assume Prof. McDonough would not advocate a command economy with everyone guaranteed a job and all wages set centrally, as it would likely guarantee a permanent fall in living standards.
We have a defunct bank with no name and over 1,000 employees presumably with little to do, because it is State-owned and public control of Corrib is advocated because there would be a bigger surplus for Ireland?
The benchmark for workers would be the top earners in ESB and Bord Gais and 15% of the stake would be sliced off from the outset.
How much of the actual operations would have to be outsourced? Do you seriously believe that a new company could advertise for staff and start from scratch?
Like it or not, our tradeable goods and services sectors are overwhelmingly dominated by US firms; any economic prescriptions which do not account for this reality can only be viewed as reheated voodoo economics.
I did look for some online content on the conference without success; the peoplebeforeprofit site is promoting an ‘End Siege on Gaza’ protest and a forthcoming seminar on Corrib gas. Kieran Allen/Ernie Ball is listed as a speaker.
Karl Rove would call these wedge issues to fire up the base and I guess the siege of Pyongyang will be well over before the armchair revolutionaries pay some attention to it.
Praise the Lord and pass the ammunition!
Oil and gas exploration and production (E&P) is a high cost, technology intensive, risky business. Mostly it’s financed by equity which the firms generate themselves or raise from the market. The risks are simply too great for any sort of structured finance to be secured. Quite simply it is not a business for governments.
Once a find is declared commercial some account must be taken of the costs incurred up to that point. It is not enough to say that all the costs incurred prior to the declaration of commerciality are sunk. The difficult task is to ensure appropriate recovery of the full life cycle costs of E&P with any surplus accruing to the state.
Maybe, Gavin’s referring to Statoil.
@ Michael Hennigan,
‘There is no perfect ‘ism’ and the current model of globalisation which hugely benefits developing countries and mainly the owners of capital in developed countries, is unsustainable. The alternative is not to revert to state companies where the main gainers are the self-interested insiders.’
Sorry to be blunt, but you’re saying what the alternative is not, not what the alternative is.
“I assume Prof. McDonough would not advocate a command economy with everyone guaranteed a job and all wages set centrally, as it would likely guarantee a permanent fall in living standards.”
Would that characterize the role of the Fed – neglected for sure, but part of its remit nonetheless? Was FDR barking up the wrong tree when he set out a bill of rights that included a right to a job? Does government investment, be it infrastructure or whatever, not have a role to play in a successful mixed economy? Would the best time to invest not be during a recession/depression when there’s ample capacity? Should housing be left to the market? Has the euro failed the social test, i.e. a structural bias that worsens unemployment during a depression?
“Like it or not, our tradeable goods and services sectors are overwhelmingly dominated by US firms; any economic prescriptions which do not account for this reality can only be viewed as reheated voodoo economics.”
I always find it odd that those who shout the loudest about US multinationals contributing little to the Irish economy are those who use their presence to limit policy choices.
By the way, why does everyone object to workers getting paid well? I wonder what the going rate is for working a rig with Statoil? Or is it just because they’d be working for an Irish state owned enterprise?
I’m not blind to our faults, but sometimes the lack of confidence in ourselves astounds me!!!
‘End The Siege On Gaza’
I would take issue Michael with your cynical dismissal of the Gaza Flotilla activities as ‘wedge issues’ to fire up the base.
People lost their lives in the attempt to break this inhuman Israeli blockade.
They have my respect for their continued efforts,and the way I see it, people in Ireland should be proud of them, seriously!
Fwiw, I am not affiliated with any political party, as I am rather convinced that post cold war political categories are no longer useful, but debates on specific policy issues instead. It means that I would be willing to work with anybody, except die hard dogmatic extremists, regardless their overall political views on specific and important policies.
I really hope that this second freedom Flotilla will not cause more lives, and brings them back home to Ireland, safe and healthy.
Good Luck to them!
I really hope that this second freedom Flotilla will not cause more lives to be lost, I meant to say.
“How many of these people ever created a job or ran a pony show?”
“What exactly is this chap a professor of?”
One of the notable aspects of academic debate is the respect with which varied views are received. Respect that on occasion flirts with brown-nosing, given the narrow spectrum within which the debate takes place.
It is remarkable that when a truly different approach to the problem is raised, the immediate response is one that is not only insulting, but is insulting in precisely the same language employed by the venerable Sir Herbert Gusset, spluttering his All Bran into his Daily Telegraph.
Some object to this or that suggestion, which is fair enough. Others, remarkably, are most upset that such matters are discussed at all.
@ The Dork & disgruntled observer
Thanks, yes, I was referring to Statoil.
I have a trace memory (now backed by a quick visit to wikipedia), that the Norwegians managed the oil finds such that it wasn’t just the government (which didn’t have the skills), or just the private sector, but a partnership, which saw skills, jobs and revenues work to the advantage of the Norwegian state.
I guess I was musing over the Dork’s
“The level of expertise for offshore operations is beyond us in every practicable way. – how could you nationalise such a project ?”
Breathtaking Sarko quote that demonstrates the strength of the European union and the power of international co-operation, the hallmark of the project
“Pledging to exercise control over France’s own debt, he said: “I wasn’t elected so that France would experience the agony of Greece, Ireland and Portugal.”
Alors Irlande, vous me faites chier!
Isn’t M Hennigan’s point that the Left in Ireland are attracted to what one might call deflective thinking? Is it easier to concentrate tongue fire on something or someone on the other side of the world than at home – Gaza, ECB, IMF, Bini Smaghi, Geithener etc?
The public deficit is still ballooning in Ireland. Joan Burton warns today that adjusting JLC agreements will put pressure on the welfare budget. One would imagine that the solution is to ‘reform’ welfare benefits, but not so it seems. That would be ‘doing something’. No one has yet explained convincingly how married men/women with a few children will find work that can compete with welfare benefits.
I have yet to read or hear of any radical Left (or Right) initiative to deal with the rising swell of mortgage defaults. Property prices have not bottomed out and credit to SMEs is as lively as a waterfall in Death Valley. Being a cynical type, this suggests to me that many on the Left are public servants or trade unionists with a guaranteed income stream.
probably best to leave the Freedom Flotilla debate off here. It’s a complex issue that has many internet forums elsewhere to be discussed on. I think MH’s point was that rather than focus on basic, boring but necessary issues relating to the gradual improvement of our economy, the ULA likes to focus on the complex and ‘loud’ issues that get lots of headlines and very few solutions. One could argue that the ULA are deluded dreamers who do very little for the constituents who elected them, other than offering false hope at the prospect of leaving the Eurozone and nationalising everything. They appeal to the disparing and disillusioned, but generally have few real answers or suggestions.
“One would imagine that the solution is to ‘reform’ welfare benefits, but not so it seems. That would be ‘doing something’. No one has yet explained convincingly how married men/women with a few children will find work that can compete with welfare benefits.”
So, what you propose is to reduce wages, and then reduce welfare by an even bigger margin? Is that about right? Would you give out food stamps? Apparently the GOP thinks food stamps are in need of reform these days. Too many people are going hungry it seems.
Mortgage defaults, and budget deficits are not the problem, they’re symptoms of the problem. It’s called unemployment!!! Talk about deflective thinking!
no chance that our intrepid seafarers would stop off in some Libyan port of their choice en route to Israel and then sail on tp Syria. These govts are killing people as well and in greater numbers. You don’t see my local TD Ricky Boy Barrett protesting on this issue.
@ Eoin Bond,
The despairing and disillusioned are voters too, as are the deluded dreamers.
“…rather than focus on basic, boring but necessary issues relating to the gradual improvement of our economy.”
I seem to remember an argument in 2008 amongst many economists about what the shape of the recession would be. Would it be a V? That was assumed as normal by many after a steep fall. Others suggested a U. You know, like valleys after ice had moved through them. Some said a W. Turned out it was an L. Seriously, for gradual, read glacial!
agreed. However, I did not bring this point up, MH chose to use it as ammo for his cynical dismissal, so perhaps you should have addressed him instead as the originator.
I felt the need to reacted to this.
@ Eoin Bond,
Interesting point. I suspect there is a strong equality feeling within the ULA.
If one person is poor, then all must be made poor for equality purposes.
I remember attending a reunion among classmates some years ago. Those people who got on in life and made something of it were generally content with their lot and tolerant of others who were more successful.
There were some others who for no other reason but themselves had not achieved anything, no qualifications, no steady job, no real assets to speak of, they existed in a sort of subsistance manner. These people were unhappy with their lot, but when they spoke of equality what they ment was to bring everybody down to their own level of nothingness. Indeed there was a angry, begrudging hatred of those who had achieved something through hard work and sacrifice.
This was their understanding of equality. It will be interesting to see if these ideals win out in the end.
he brought the issue up to show where their priorities lie – on eye-catching headlines made abroad, rather than real boring issues at home. Do you deny that issues like that aren’t wedge issues? Look at the reaction on here straight away! QED. It’s a classic Irish thing to want to solve all of the worlds problems whilst ignoring our own. Anyone who ever read Ross O’Carroll-Kelly can’t but laugh at the somewhat ridiculous but somewhat true joke about all the Southside girls wanting to work for Amnesty Intl and adopt starving African kids, but at the same time hating the sight of the poor and destitute of Dublin. As a social observation, its spot on.
I think MH’s basic suggestion/question would be, as i read it, whether a small political party, which has been granted a, in relative terms, chunky political mandate and a chance to create a new political dialogue in this country, should be devoting its time to such issues at the moment?
Just two points…
It is not uncommon for well off individuals including those with guaranteed jobs and an income flow for life, to make proposals that could have “disastrous” (to use Prof McDonough’s own word) consequences for many struggling to keep a job in the private sector. It may not even be on their radar.
It’s likely that many of the existing unemployed will never work again never mind risking more broken lives.
As regards Gaza, I was in no way dismissing the issue of Palestine. I lived in Jeddah for five years and worked with Palestinians.
What I was reacting to in passing, is the apparent need for an American involvement in an issue directly or indirectly to motivate people; In the ME, the Kurds are the largest ethnic group without a state and have been treated badly in 4 countries over many decades but their cause evokes no interest; Darfur, West Sudan? China in Myanmar/Burma and China maintaining North Korea, China in China and so on.
@Bond Eoin Bond
Passengers departing to the USA are now subject to very intimate body searches. Their credit card and other details are furthermore passed on to the US government by the airlines which files them indefinitely with their biometric data. Many other countries both free and unfree have equally onerous provisions.
All this is the result of the 9/11 attack on the US, an event which can hardly be disentangled from either the colonial history of the middle east or the history of Israel. Do some research on the colonial and post-colonial histories of Lebanon, Syria or Iraq and you’ll find a story of cynicism and brutality to rival any. Each was designed specifically to foster internal division with consequences that reverberate to the present day.
Each was furthermore destabilised in the post colonial period. Syria was subject to repeated coups engineered by the CIA until it finally turned to the USSR which was more than happy to prop up the Assad regime. The Baathist coup in Iraq was also US sponsored and Saddam Hussein was given the job of murdering suspected communists, hundreds of people named by the CIA.
Countries like Syria and Iraq had plenty of decent, peace-loving and democratic politicians; their most usual reward was a 9mm round in the neck.
If, as is often claimed, Iran is a dangerous threat to all our lives and liberties, how can it be simultaneously true that Israel is a wedge issue of symbolic importance only? On the contrary, these issues have repeatedly spilled over into the (domestically) democratic and free Western world.
I’ll add that political orthodoxy in the modern world is like a rabbit caught in a snare measuring progress by how much the wire has bitten in. Essential perspective is wholly absent.
This morning I see Irish Life is coming to the trough for 4 Billion.
At some point as we grasp for straws attractive options will be to default on our sovereign debt and leave the Euro Zone to become a Cayman Islands or Panama.
There is no indication that the people or the Gov’t have the intestinal fortitude to deal with the problem in a forthright way. As long as the ECB pumps in the funds to float our boats it continues to be business as usual. When the ECB stops pumping the politicians will enter their usual helpless, complaining mode as they blame everybody but themselves. The ECB for the fourth year now have given us ample opportunity to deal with the problem. The opportunity was squandered by the previous and present Gov’ts. I am not surprised that ULA has taken the stance it has and I expect to see even more radical groups come out of the wood work as time progresses. 20% ten year bonds beckon.
@ Eoin Bond
“Ross O’Carroll-Kelly can’t but laugh at the somewhat ridiculous but somewhat true joke about all the Southside girls wanting to work for Amnesty Intl and adopt starving African kids, but at the same time hating the sight of the poor and destitute of Dublin. As a social observation, its spot on.”
I agree its a very apt social observation.
But haw many South side Dublin girls that hate the site of the poor and destitute in Dublin are members of the ULA. I would say since the ULA’s base are the poor and destitute of Dublin and those that work with them it might be close to Zero.
Regarding saving the world, I don’t think protesting against the Gaza siege prevents the ULA from protesting against things like water charges. And I don’t think does protesting against the Gaza siege (which include people from across the political spectrum, not just the left) are ineffectual either. Apartheid South Africa in the past, and Israel in the present, both want to be considered as normal ‘democratic’ countries, and so are sensitive to international criticism, such as the strike in Dunnes during the 1980s. In contrast Kim Jong Il doesn’t really care, so sending a both to North Korea wouldn’t have much of an impact on him.
@ tull mcadoo
I doubt the Israeli ambassador will be happy though that you put Israel in the same category as Syria and Libya. Syria and Libya are already under various sanctions (especially with regard to weapons). Egypt was complicit in the Gaza siege, but luckily that, and much in the Arab world, is changing.
Most of the EU is in a formal military alliance with the USA and thus, in effect, with Israel. This is not true of Sudan or China, neither a country especially susceptible to public pressure.
eh, was there a point there? And who called Isreal a “wedge issue of symbolic importance only”??? MH has given us his perfectly valid and accurate reasons for bringing it up, i’ve given my own. Israel/Palestine is frequently brought up by both sets of supporters simply because its a nice n simple, black and white, good guy vs bad guy (for both points of view) debate that raises the profile of anyone who mentions it. Would that life was so simply explained.
you’re correct to a point, although it should be noted that 40% of the ULA’s TD representation is actually from the Southside of Dublin…
Well MH said that “Karl Rove would call these wedge issues to fire up the base” and you asked “do you deny that issues like that aren’t wedge issues?” and questioned its current relevance. It seems to me that the quotation you cite is a fair reflection of these remarks.
…and the point (which I thought was fairly obvious from the first paragraph) is that far from being irrelevant, Middle Eastern politics has a very practical impact on people’s lives thousands of miles away, even in Ireland.
“So, what you propose is to reduce wages, and then reduce welfare by an even bigger margin? Is that about right?”
What is the choice that will aid recovery?
Welfare rates in Ireland are about the most generous in the EU. Unskilled married-with-families claimants are unlikely to get any employment that can better their welfare benefits – leaving a host of people to a life on the dole. For some unfathomable reason, even ‘workfare’ proposals haven’t been thought out for fear of upsetting the trade unions in their social partnership guises.
Wage reduction, personal debt restructuring and mortgage repudiation (in some form) need to be simultaneously thrown together into the pot for resolution. As I have said many times here: default begins at home.
“symbolic importance only” would be the parts you threw in yourself…wedge issues can be real issues too, its just that they are often used for political gain only…
Fair enough, it’s just that the original argument made falls apart if it’s conceded that the issue is of genuine significance.
the original argument was that politicians use wedge arguments to create easy headlines and fire up the base, especially when there’s little chance of any actual solution. Is that inaccurate?
So far you’re the only one suggesting that people consider Israel/Palestine as of “symbolic importance only” or “irrelevant”. I just reckon my local TD should be focusing on other things.
“Mortgage defaults, and budget deficits are not the problem, they’re symptoms of the problem. It’s called unemployment!!! Talk about deflective thinking!”
To me this aptly explains the chicken and egg economic dilemma that we’ve boxed ourselves into.
On the one hand everyone agrees that over the long term solving the unemployment problem will ultimately go a significant way in solving the housing/ mortgage debt nightmare but on the other hand unless Mr. Noonan’s call for a shopping spree comes to fruition then no significant domestic service related jobs are likely to be created so you’re back to square one.
Therefore the question is which one actually comes first (if such a thing were possible at all) – sorting the mortgage/ personal debt problem or trying to stimulate some sort of ’employment’ opportunities as the Govt have tentatively done.
There can only be one answer in my view – one sorts out the real problem and that’s the shocking lack of domestic demand in the economy and that can only be stimulated by putting additional cash back in peoples pockets.
Cash in this instance is where the citizens feel they can afford to spend it without having the worry of saving for fear of job losses or additional tax charges or additional fees etc down the line. So its micro economic forecasting on a grand scale and unfortunately the current forecasting is suggesting ‘safety first’ – for those who have jobs. For those who have suffocating debt concerns – tough it out.
Neither of the two solutions works – so we need a change.
This seems so terribly basic but for some reason we don’t seem able to devise solutions that gets to the root of the issue and that to me is the excessive debt overhang – plain and simple.
I watched the Frontline programme last night to see if in fact there were any bright ideas emerging as to how we can begin to sort the debt issue out.
Sadly I feel the issues/probelms debated are the same as we’ve being listening to for the past 3 years. We need to move on as a country, and as indicated above what’s going on at the moment is simply not working.
My suggestion in relation to mortgage debt is I believe sane, workable and affordable.
The single biggest issue I believe which has yet to capture the nations thought process is that this issue is fundamentally about mis pricing – there are many other issues noted, mooted, suggested, rumored etc etc but when push come to shove residential housing was mispriced as an asset class by the banks in Ireland for the best part of a decade. Fact.
Until we recognize this mis pricing error we do not solve the wider economic woes an ‘L’ shaped recovery noted above in an earlier post will beome the norm.
It’s not difficult to rectify this mispricing error. I disagree with the contributors on the programme last night in suggesting otherwise. Why?
We know the long term rental yield for residential assets in the country from both Govt numbers since 1976 and other proxy risky asset classes. On average the long term yield for Irish residential property assets is 7% – recent auction results suggests this has moved out to c9% but to fix the problem work off the long run average as the demand supply dynamic will eventually do its job in this regards. The long run yield number is indisputable and not subject to bias or favour.
Method: From 2000 reprice ALL residential assets off this long run 7% capitalisation metric using actual rents or proxy rents where none available. Get the correct house price on that basis. This is fundamental to the process because it recognises the extent of the mispricing error at the time of the original sale.
The terms of the mortgage are known for each transaction be it 90% LTV etc when it was agreed. Calculate what the ‘correct’ mortgage should have been against the ‘correct’ house price at the time. The repayments since the origination of the mortgage are known. Deduct the actual repayments against the ‘corrected’ mortgage balance and calculate what the model balance should be today and compare it with the actual balance and write off the difference.
This achieves a number of things. It prices property against the only valuation metric known that works i.e. the long term rental yield on the property – all other metrics are inferior, and it recognises that banks were at fault as their house price lending models simply failed to do the job required i.e. protect the long term stability of the market and their own balance sheets.
Up to now the banks have failed to recognise in monetary terms that they had a significant part to play in this mispricing debacle and consumers were being asked to should 100% of the mispricing error which – this is clearly daft.
Who pays: By recapping the banks to the extent that we have we’ve already paid – This process simply crystallizes the mispricing error.
I appreciate its crude, unfair, lacking elegance etc etc – but it gets the job done. Fixes are generally unfair ask the friends and relatives of those killed and injured in the North and then to see the people who committed these crimes walk early from jail under the Good Friday Agreement. Fixes are unfair, it’s a fact.
All regimes in the ME have blood on their hands but our freedom sailors are not going to protest at some of the bloodiest.
I have the DLR tallies from the last two GEs and the last local and can state with some certainty that a lot of the ULA vote comes from the relatively comfy areas of the borough. Obviously not many from the long driveways but you would be surprised.
“the original argument was that politicians use wedge arguments to create easy headlines and fire up the base, especially when there’s little chance of any actual solution. Is that inaccurate?”
This is phrased so generically it could hardly be wrong; it doesn’t even refer to the ULA specifically. I’m sure they’d love headlines but I’m not aware of them receiving any.
If it’s accepted that the issue is relevant then I don’t understand how anyone could begrudge a TD the few minutes needed to express a point of view on Israel that has probably changed little over the years.
Neither Gaddafi nor Assad is likely to be welcomed to the Whitehouse anytime soon. In fact each would be more likely to end up in the Hague if he were careless about his travel plans. The logic of claiming people should protest even-handedly suspect also. Are they not entitled to fear blow-back of the sort inter-religious and inter-ethnic conflicts generate that intra-religious or intra-ethnic ones seldom do?
The big arc of history as it’s most often explained involved a series of victories for the white hats over the black hats, with Berlin ’45 and ’89 being prominent among them. Everyone knows or ought to know there’s much more to the story than that, yet this is the orthodoxy.
There isn’t the slightest chance, for instance, of any of the perpetrators of this atrocity ever finding himself alongside Radovan Karadic in the dock. Ilario Pantano, who won the Republican nomination for congress in North Carolina’s 7th District in spite of having murdered two bound and unarmed prisoners in Iraq, likewise has nothing to fear.
How much debt does ILP bring to the table now that the market has given up on it? How much will the taxpayer pay in lieu of breaking the company up and giving the bondies the scraps?
On Gaza I think there is a feeling that popular action has a chance of forcing a breakthrough. You could look at it as short selling, Tull. There is no hope of changing policy on the bank collapse but Israel is going the way of South Africa.
“a few minutes”? Again, you’re missing the point. MH said he tried to find some info on their conference, and all he could find was a protest about Gaza, and a speech about Corrib. We’re at the point where you’re reading 10 million times too deeply into other peoples words.
@ Adrian Kelleher
Lenin apprently never dismissed the Western apologists of the brutality of the Bolsheviks in their quest for a Utopia as “useful idiots” but they were.
To link NATO with Israel and the Palestinian issue is a joke.
For whom am I an apologist?
NATO is a formal military alliance. It was so during the Christmas bombings, the bombing of Cambodia, the coup and subsequent massacres in Chile (carried out with US assistance as attested to by the Nixon tapes even though it was already known that the plotters were guilty of murder), the deposition of other elected governments in Guatemala, the subsequent genocide in that country, the murder of Patrice Lumumba, the anti-communist terror campaigns in Greece, Spain etc. under the dictators, and so on.
Yet none of the perpetrators of these crimes will ever face justice any more than the criminals responsible for the Tianamen square massacre or the litany of war crimes in Chechnya will. Law that only applies to the weak is no law.
At least the voters of the 7th district get to choose who is going to represent them. Hopefully Assad ends up in the dock, along with a few HAMAS guys and a couple of Israelis as well. And while we are at it, we could send a few apologists for ME despots from the IRsh left as well.
“we could send a few apologists for ME despots from the IRsh left as well.”
Who are these apologists and how or where have they defended the despots? Or is this just another smear?
@ Michael Hennigan
“What I was reacting to in passing, is the apparent need for an American involvement in an issue directly or indirectly to motivate people; In the ME, the Kurds are the largest ethnic group without a state and have been treated badly in 4 countries over many decades but their cause evokes no interest; Darfur, West Sudan? China in Myanmar/Burma and China maintaining North Korea, China in China and so on.”
I sort of agree with this but find the examples odd.
The Dafur conflict has hardly evoked no interest.
Aung San Suu Kyi and the struggles in Burma are very often front page news / subject or protest and solidarity and rightly so.
The China reference is outdated. What are China’s supposed misdeeds in North Korea in the post Mao era? From my experience there they are have mostly tried to contain the madness in NK for fear of famine and refugee crises, much like the south has. If you had said why is the NK regime not subject to such protests I might agree, and this even backs up your point due to US involvement on the other side.
As for China itself are you seriously suggesting people take to the streets to protest 500 million people dragging themselves out of poverty in whatever imperfect circumstances.
You rarely hear any condemnation of any activity by any ME state other than Israel by the Irish left. You rarely see the usual supects outside the Syrian/Iranian/Libyan (tick as appropriate) embassy or consulate.
I see. So it was just a smear then.
I presume you protest outside the Syrian embassy on a regular basis? By your definition, the world consists almost exclusively of apologists for the Assad regime.
I think from now on, I’ll mark down 4:15pm today as the time when the English language lost all meaning.
So anybody who dares criticise the “politics of selective condemnation” of the Irish left is guilty of smear tactics.
What you describe does not satisfy the definition of “apologist”.
I like the use of united AND alliance in the name;
“United Left Alliance”
I give this ‘Alliance’ six months before it becomes a swamp of internal fighting and bickering between ideologically pure lefties and others who just want things to be ‘fairer’ but have no real idea about how that should happen.
“You rarely see the usual suspects outside the Syrian/Iranian/Libyan (tick as appropriate) embassy or consulate.”
Ireland never moans about countries that supply it with petrol. Better the devil you know and all that. I never saw the Sindo lay into the Emirates.
Israel is the only country in the region running an apartheid system. And it has no oil.
Indeed, to quote Obi Wan Kenobi…
“Only a Sith deals in absolutes”
Richie Boy Barrett comes in for stinging attack from an unusual source
Yawn – morality arguments are so 2nd millennium , we can all get our knickers in a twist about just war arguments till the end of time.
Arguments harking back to Thomas Aquinas are a bore now – we should just learn to follow the money.
This formalised war tradition is needed to peserve internal order while exporting warriors who truely believe & thus can be focused to a point in space & time.
Unfortunetly some non state actors do not have the luxury of internal order to moralise their existence although many are unknowing dupes of outside states with designs on others.
Such is life.
@ Yields or Bust,
“Sadly I feel the issues/probelms debated are the same as we’ve being listening to for the past 3 years. We need to move on as a country, and as indicated above what’s going on at the moment is simply not working.”
It’s not, but you wouldn’t know it by reading some commenters here. I like your proposed solution to the mortgage problem. As far as I’m concerned the house price boom was a scam, straight up, pure and simple. Even now, to this day, I consider the property obsessed media as one of the chief architects of our problems – one of.
I suppose you know that Irelands number of High Net Worth Individuals increased by over 5% last year, and 10% the year before. Some people are having a “great” depression.
@ disgruntled observer
“As far as I’m concerned the house price boom was a scam, straight up, pure and simple. Even now, to this day, I consider the property obsessed media as one of the chief architects of our problems – one of”
And unfortunatley it will not be the last scam we hear of… up next pensions.
The policy recommendations of leaving the Euro, of defaulting and of instituting a standing offer of a minimum wage job for anyone who wants one are from the body of work being developed under the heading Modern Monetary Theory.
Here is a Modern Monetary Theory analysis of Ireland using experimental data sets from the CSO: http://bilbo.economicoutlook.net/blog/?p=14662
“I suppose you know that Irelands number of High Net Worth Individuals increased by over 5% last year, and 10% the year before. Some people are having a “great” depression.”
Increased what? In numbers, wealth or overdrafts? Meaningless figures.
Still no proposals to address what is quaintly referred to as the ‘welfare trap’.
Three out of Five ain’t bad. I’d hold off on the revolution in Mayo for the mo … need to get a bit more organised on a comprehensive Statoil model first. The ‘Euro’ question remains open – default within it remains an option.
“Increased what? In numbers, wealth or overdrafts? Meaningless figures.”
The figures come from the global wealth report. The clue is in the title. Apparently there’s over 15,000 people with a net worth (not including the family home) of over $1,000,000. Now being generous to them, I’ll allow that they all only have $1,000,000, and not the ridiculous amounts that some of them barely survive on. Well, that leaves us with a not too shabby, but extremely conservative figure of $15,000,000,000 for their pony shows.
“Still no proposals to address what is quaintly referred to as the ‘welfare trap’”
Do you still want to talk about wages competing with welfare?
@tull mcadoo, Michael Hennigan
The original Irish Times article (reproduced here) stated that “Richard Boyd Barrett of the Irish Anti-War Movement told attendees that it was ‘entirely legitimate’ to argue that ‘Israel has no right to exist’ because ‘it is not a normal state but a state built on violence, oppression and apartheid'”.
The youtube video quite dishonestly turns this conditional statement that links Israel’s right to exist with specific behaviour into an unconditional statement which denies Israel legitimacy regardless of what it does. In the actual speech, the conditionality of the claim was underlined by a call to “convince people that [Israel] has no right to exist as long as it denies rights to Palestinians”. You’ll find that people like Gideon Levy write things no less emphatic from within Israel on a daily basis, but your youtube buddy has transformed remarks linking legitimacy with behaviour — not controversial in itself since the Second World War — into statements that are unconditionally anti-Israeli in all circumstances.
The dishonesty does not end there; the quote from ‘The Socialist Worker’ was not written by Boyd Barrett and was not a general endorsement but a comment specific to the 2006 Lebanon war. Likewise, the attempt to associate him with Al-Qaida is blatantly misleading; the quote was part of an article entitled “Hear the World – a collection of quotes from friend and foe”, and it’s fairly safe to say that Trotskyites are included among its foes. Boyd Barrett said in response that he had “nothing but contempt for al-Qaeda and its ideas.” (link).
Anyway, for the purposes of argument I’ve no problem with Boyd Barrett being characterised as anti-Israeli. This is not the claim that was made here repeatedly, however. I’m still waiting for the evidence — any evidence — to support the claim that ULA is an apologist for dictators or that I myself am their “useful idiot” (classy stuff, by the way, MH).
I presumed this blog focused on the Irish economy. Is it in danger of turning into another bash-Israel rantsite? Mods please.
The thread concerns ULA and the claim was made that ULA is an organisational apologist for Middle Eastern dictators, a smear that has not been backed up by evidence and to which it is not reasonable to deny a right of reply.
Who is engaging in “bash-Israel rants”? I didn’t see any.
As regards Gaza, I was in no way dismissing the issue of Palestine. I lived in Jeddah for five years and worked with Palestinians.
Thank you for your clarification Michael.
@Yields or Bust
Is this offer of sensibly low house prices retroactively open only to those who decided to buy at stupidly high house prices? Or is it also open to those who thought house prices during the boom were ludicrous and decided not to buy at stupidly high house prices?
Cos, you know, gee, I’d love to get a refund of the years I spent in rented accomodation and be able to live in any of the many houses I would have liked to buy during the boom but couldn’t/didn’t because the price other people paid was too high. Instead, under your proposal, I feel myself being set up to pay for other people’s houses and being further directly prevented from buying my own.
I’m all for clever solutions to the debt crisis and full of compassion for those in bad situations but screwing other people shouldn’t be the solution.
As for the parallel discussion on Welfare, I again refer people to the OECD tax/welfare engine at http://goo.gl/WpPKz which shows that Irish unemployment benefits for a family with two kids are superior to working on the average industrial wage in either France or Germany (among others). Note, better than the AVERAGE industrial wage not the minimum wage.
Government spending of any description can be characterised as “screwing other people” by your definition.
Would I be correct in guessing that you benefited from free education up to university level? If so, the government of the era raised taxation – or “screwed other people” in your terminology – for your exclusive benefit, without placing any constraints on your subsequent employment or receiving any guarantees in return.
You were certainly shrewd in avoiding getting mixed up in the property frenzy, but to characterise yourself as somehow poorer as a result is strange.
On Apr 13th 2006, Brian Cowen told the nation that it was “economic fundamentals that [were] currently anchoring the performance of the property market”, adding that “the buoyancy of the housing market primarily reflects the innate strength of our economy’s performance over the last decade or so, as well as … increasing competition and innovation in the mortgage market”. Just in case there was any doubt he repeated that “fundamental factors largely account for the increase in prices since the mid-1990s”.
This was deliberate deception of citizens by the holder of one of the most senior offices of state, that of Minister of Finance, who had been repeatedly warned by many sources of the dangers of the bubble. The only thing that surprises me is that nobody has sued the state for failing in its responsibilities; were class action lawsuits possible under our legal system this would certainly have happened.
BTW that OECD database you link to gives bizarre results. I very much doubt that a single person in South Korea on 0% of the average wage and without children gets $7,488,000 in government assistance annually for example.
Adrian, perhaps that’s an exchange rate issue. 1 euro = 1552 Korean won.
Examining the results in euro terms for 2009, the last year available gives…
Married couple, 2 children, neither employed:
Housing Benefit: 6,828
Other benefits: 24,861
Average Wage (Germany): 40,383
Average Wage (France): 32,943
Note that the average industrial wage is normally rather higher than the average wage, so I don’t know where the “average industrial wage” claim comes from as the tables make no mention of it.
Assuming social housing or a family that owns its own dwelling, we’re left with 24,861 p/a or €119.19 each.
Housing benefit of 6,828 annually is not adequate to house a family of four and in fact anyone who tried to house a family for that amount of money would likely see their children taken into care, so in most instances actual disposable income will be well below the €119 figure.
€119.19 per week that is.
@ Hugh Sheehy
Good luck in the next election
I am glad to see the discussion returning back to Ireland and how the economy and society is effected by external (usually European) affairs.
For a while I felt I was reading a different site. 🙂
When there are policies proposed that are so assymetric then the “screwing someone else” charge is fairly accurate. That isn’t a point I’ve heard made very often when talking about free education.
You looked at the Gross Income column. The family with the average (industrial or not) wage is paying taxes in France and Germany.
The net number has the Irish welfare recipient taking a net figure several thousand more than working in France and actually a few hundred less than working in Germany.
I don’t understand how monetary adjustment (which is what ULA proposes) is any more asymmetric than a free university education. Remember that the fees charged in the old days were only around 30% of the actual cost.
This website lists current fees for non-EU students as follows:
Medicine and related €31,000 – €45,000
Engineering €9,100 – €20,300
Science & Technology €9,100 – €16,500
Arts & Humanities €9,100 – €15,500
Business €9,000 – €15,500
…pricing an engineering degree at €40,000-€80,000 and a teaching degree in the humanities at around €46,000 including the HDip year.
Of course, like all direct services, income taxes payable on the earnings that would otherwise be needed to pay for the service are obviated (just as refuse charges, water charges etc are in effect 100% levies on the income needed to pay for them, as these were previously paid for from public funds). In many instances, parents would need to save around twice these figures before tax to pay for a child’s university education.
The large majority of this government largesse goes to the higher socioeconomic groups, a very asymmetric proposition from the point of view of a childless couple or a low earner.
McDonough’s proposed devaluation would solve your posited welfare trap in a very direct manner, by the way.
Incidentally, Michael Hennigan was mistaken in claiming ULA only has info about a protest to the Israeli embassy on its website. He went to the wrong site. The “national forum” is listed #1 on the ULA website which makes no mention of any Palestine protest.
@ Adrian Kelleher
University education policy is a different topic.
I was addressing Yields or Busts proposal.
One thing at a time.
The topic is the justice of public expenditure. This is how you have styled the issue, not I.
It seems that you were in receipt of certain generous public subsidies in your time(*) yet it is a great injustice if others receive similar generosity…
(as I certainly was, though my family had to pay fees as PAYE earners whereas a classmate of mine got a grant even though both his parents were self-employed, upper middle class, professionals in health care. I won’t specify as I don’t want to make them identifiable.)
Now that many sectors of society eg. professional and (former) middle income families are currently experiencing unemployment/underemployment medical cards and university grants may become extremely important factors when “incentivising” people back into the job market.
After all even “workaholics” have to calculate the costs and benefits of employment or un(der)employment when it comes to healthcare and education of their family and off-spring. Ironically universal health care and equal 3rd level opportunities (I read today that we even have to “import” 250-400 medical doctors) may become essential policies of political parties on the left and right.
@ Adrian Kelleher
I don’t see that Yields or Bust’s proposal would be “similar” generosity to university funding. In my view it would be different. It would be unjust and ungenerous.
It would be more akin to the injustice of your parents paying for both your subsidy and paying the subsidy of your classmate whose parents were able to unjustly game the system. That was unjust, IMHO, but you are free to disagree. I’ll be on another thread.
YoB’s proposal is not comparable with gaming the system. It’s very straightforward: one instance details private fraud, the other the legal policy of the government.
You have made no effort to justify your point of view or explain why it is that one form of public spending is unjust and the other fair. Each involves handing large amounts of public money to certain individuals and each is rationalised identically: as pursuing the public interest.
YoB’s proposal would be enlightened self-interest rather than generosity. Current policies will fuel deep resentments and we know from other instances that such resentments can fester for a long time.
It’s only a matter of time before people start organising, and when that starts there’s no telling which way things might turn; the organisers might be politically shrewd or naive, they might be cynical or idealistic, and violent action might discredit them or be so carefully calculated as to provoke an overreaction by the authorities without whipping up outrage in the population at large. As regards the last possibility, the odds favour the former but the latter is certainly achievable with nous.
Tony Judt quotes Keynes as saying “once we allow ourselves to be disobedient to the test of an accountant’s profit we have begun to change our civilisation.” The evidence that it is not reasonable to budget for an economy in the same way as a corner shop is all around us. Employment needs to be the key objective.
“It’s only a matter of time before people start organising, and when that starts there’s no telling which way things might turn;”
…and pigs might start flying.
The only successful opposition to emerge from ‘the people’ recently was the pensioner revolt against proposed medical card bars. No other country in Europe has so passively accepted external adjustments as Ireland. And in terms of getting ‘the people’ onto the streets, the Left don’t have the ability and the the trade unions lack the appetite.
Action on employment won’t come from street protests but from wage reductions, exports and tourism.
I didn’t say violence might arise on the left (or action on employment for that matter).
Anyone could start organising with any objective you care to mention. The most likely outcome would be that violence would be brief and self defeating but the course of events would be very sensitive to the specifics of the actions taken.
A shrewd and cynical revolutionary might emulate the Weather Underground in the initial phase, provoke and overreaction, and attempt to create parallel subversive and political arms while controlling the military effort with an entryist vanguard.
Your smugness reminds me of the Russian aristocracy. They too felt their position was secure and that their fortunes would endure forever.
I’ve a certain guilty taste for what might be called imperial kitsch. It’s a glimpse at a real rarity: a vanished world.
BTW, anytime you feel like backing up with some evidence your baseless claim that it was I rather than Michael Hennigan who raised the topic of Israel or that I engaged in “Israel-bashing rants” go right ahead.
I was very specific in suggesting that fixes are unfair.
I’m not hiding from that fact. I’m telling you as it is and how it will be. Be under no doubt that schemes or arrangements such as mine are coming, in fact if truth be told they have been ongoing for the past 2 years.
Talk of ‘I’m not paying for my neighbours mortgage’ etc is all fine and well but tell me exactly how you will know what deals or arrangements are going on behind closed doors?
It took an Oirchteas request from the floor of Dail to find out the extent of the Collier DAA bonus for Gods sake, and that’s a Semi State monopoly company.
So don’t be so naive to believe that your neighbours have not been busing themselves in any amount of mortgage agreements with their banks or building societies all under your very nose. Believe me its happening.
The point I’m making here is that write offs are required to fix a mis pricing error because without a fix the problem never gets solved, except in slow motion. The fact remains that ordinary consumers, perhaps not as financially sophisticated as your good self, were badly duped. This is wrong.
The ‘independent’ advice property consumers sought was anything but at the time. All ‘independent’ parties to a residential property transaction were only too delighted to see prices sky rocket – higher legal fees, higher real estate commissions, higher lender bonuses etc etc. So lets be frank ‘independent’ advice was very thin on the ground.
The normal consumer in matters property is a complete novice – and this is perfectly understandable. They normally transact once or twice in their adult lifetime and expect the advising ‘experts’ to be just that. Instead most who purchased over the past 10 years received shockingly bad advice particularly in terms of price and comparable yields. In fact I know those on the other side of the table i.e. the advisors, were as much in the dark as to how property should be properly valued so in every respect this was a true to life case of the blind leading the blind. The results of such crazy decisions are there for all to see.
Now that light has been shed on the disaster does it really make any sort of sense that those least able to afford the mis pricing error are the party left holding the mis priced asset baby?. This is not a senior bond trader mishap, those on bond trading desks are expected to know their way around the do’s and don’ts in risk asset pricing- people who go to the property shop once or twice every forty years should in any sensible society be treated to a separate set of rules and at the very least should expect society to show some sort of reasonable aptitude to their obvious plight, particularly when that plight is likely, and has, reverberations, to a much wider cohort.
Those in society who cannot see beyond the argument as promulgated by your good self here are in my eyes not solution seekers but stereotypical Irish begrudgers and this short sightedness needs to end.
What I’m suggesting is no giveaway – it simply brings reality back to the market. Let’s not forget that in a leverage driven market such as the property market those providing the leverage control the price. This is not a normal cash market. The banks mis priced the asset class for a decade and should be forced to rectify that monumental error at least back to long run average levels.