Categories Uncategorized Irish Times: New Finance chief told junior official to disregard property crash fears Post author By Gregory Connor Post date July 4, 2014 100 Comments on Irish Times: New Finance chief told junior official to disregard property crash fears Interesting short article in today’s Irish Times. Related ← Reminder: Labour Markets During Crises Conference on Wednesday → Welcome to the Everything Boom, or Maybe the Everything Bubble 100 replies on “Irish Times: New Finance chief told junior official to disregard property crash fears” The next Irish choice for the European Court of Auditors has been selected. This is all so ‘2007’. Things have moved on. The economy is growing rapidly again, there is a developing housing shortage, and house prices are rocketing. If past experience (1958-62 and 1988-1992) is anything to go by, the resurgence in the economy will soon lead to a resurgence in population growth. This will make the current housing shortage seem like small beer. Ireland’s main requirement is now to ramp up the construction of new houses to at least its average level of the past few decades. We are miles below that at present. Demonising those associated with the last construction boom is no way to achieve that. If people are to be demonised because they failed to predict the top of the boom, then the same should apply to those who failed to predict the recovery. There are many commentators/academics and economists who fall into this category, as I outlined in another thread. From 2006: ““Go back to them and say this . . . the large increase in new housing supply will restore equilibrium to the market . . . There is a broad consensus amongst commentators that the most likely outcome for the housing market is a ‘soft landing’. The government continues to run a prudent, stability-orientated budgetary policy,”” Pub quiz question; Guess who said that Bertie Aherne Sean Fitzpartick Peter McVerry None of the above. Welcome back, John the Optimist! I have not seen a comment for awhile from you. I agree it is inappropriate to demonize all those who “got it wrong” in supporting disastrous government policies during that period. On the other hand, it is important to have in place an objective civil service support staff for the banking inquiry, for example. Has decision making at the Department improved? Surely that’s the key issue. Has the Department learnt anything or do they still eat Bourbon biscuits with the tea at 3 o’clock ? http://www.esri.ie/UserFiles/publications/WP389.pdf I vaguely recall my mortgage broker saying much the same thing….. 🙁 @JtO, GC and others Surely the point is that he steamrolled a colleagues independent analysis in favour of towing the Government line. There is not a lot of info in the article but it seems that he dismissed concerns out of hand. Maybe he carried out his own detailed analysis and came to the considered conclusion that the property market was sound. Not foreseeing the risks in the market is forgiveable (just). Dismissing independent analysis in favour of the Government position is not. @JtO, GC and others Surely the point is that he steamrolled a colleagues independent analysis in favour of towing the Government line. There is not a lot of info in the article but it seems that he dismissed concerns out of hand. Maybe he carried out his own detailed analysis and came to the considered conclusion that the property market was sound, but somehow I doubt it. Not foreseeing the risks in the market is forgiveable (just). Dismissing independent analysis in favour of the Government position is not. Janet Yellen may have said something similar to a junior colleague yesterday. Bubbles are very tricky. @ JTO Taking the present population pyramid are we not looking at a steady 15 year decrease in those of house buying age, perhaps a 20% decline? This decline already seems to be showing up via the declining briths. Considering the English, American and Australian economies aren’t in any more trouble than our own, where do you see the population increase coming from, Eastern/Souther Europe? @ JTO I can’t help but think that this much talked of increase in supply will hit the market in 10 years, when the those of house buying age will be lower, thus creating another generation of poor unfortunates who bought when supply was tight and credit cheap. @ JTO By the way, good to see you back. What have you been doing for the last 4 years? Buying up property? Surely the issue is why he did what he did. If it was to play the party one then it paid off. If it was genuine convicting then he may need to reflect what has he kearo @BCT “Not foreseeing the risks in the market is forgiveable (just). Dismissing independent analysis in favour of the Government position is not.” +1 Michael Fingleton, by all accounts, was also well able to keep dissenting views well out of the limelight. @John Foody There is no doubt that there is a housing bubble once again in Dublin. Prices in the past 6 months have just rocketed. [I have reason to be observing it at present]. Another generation is being suckered in by a deliberate manipulation of a shortage of supply and by extending credit from 80% to 92% of house price. The reduced deposit % has gone straight onto the house prices within the last six months. It does seem to be quit a dysfunctional market at the moment. There certainly is a lot of interest in getting prices up, including, unbelievably, from the minister for Finance. I’m not sure the deposit size is much of a factor considering 50%+ of sales are cash. Which is clearly not sustainable. Mortgage affordability is probably about the same for a buyer today vs. as it was at the height of the market in 2007, provided of course the the latter has a tracker. So much for our ‘competitiveness’ gains, or perhaps ‘competitiveness’ only applies to driving wages down. The plank who said sure it’s grand became the boss. And what happened the woman who questioned him ? @Seafoid Perhaps she has been called before the retired Garda Commissioner to explain her ‘disgusting’ remarks! @John Foody Where do you see the population increase coming from? Population growth will come mainly from the excess of births over deaths. This is called the natural increase, i.e. the increase that would occur if there was zero net migration. Ireland has by far the highest rate of natural increase of population (births minus deaths) of any country in the developed world. In most developed countries the number of births currently is about the same as the number of deaths, i.e. the ratio is about 1.0.. In some of the more fertile ones, the ratio of births to deaths is in the region 1.2 to 1.4. In some of the less fertile ones (like Germany, Austria, eastern Europe), the ratio of births to deaths in in the region 0.6 to 0.8, i.e. far more deaths than births. But, in Ireland the ratio of births to deaths in recent years has been in the region to 2.6 to 2.8. No other country in the developed world comes remotely close to Ireland’s ratio of births to deaths. Looking at the actual figures, there are approx 70,000 births annually in Ireland (down from 74,000 a couple of years ago) and 29,000 deaths. The natural rate of increase of population (assuming zero net migration) is approximately 40,000 to 45,000. Over a decade, that’s a population increase of almost half a million (I repeat, assuming zero net migration) Looking at specific age-groups, these are the CSO figures for the number of persons in young age-groups in April 2013: 00-04 365,700 05-09 333,100 10-14 308,900 15-19 274,500 20-24 258,800 So, assuming zero net migration, the number of persons in the age-group 20-24, which is when most people move out of their parents’ house and into their own house (whether or not they buy it at that age, or rent and buy when older, is immaterial) is currently at its low point and will rise steadily from now on. Again assuming zero net migration, the age-group 20-24 will increase steadily from 258,800 now to 365,700 in 20 years time, an increase of 41.3 per cent. So, assuming zero net migration, the demand for houses in Ireland will soar in the next two decades. But, I hear you asking, what about migration? Between 1971 and 1982 and more so between 1991 and 2009, Ireland’s high natural rate of population increase was boosted even higher by net immigration. While between 1986 and 1990 and between 2009 and 2014 it was reduced by net emigration. Obviously, no one can predict with certainty which way migration will flow in the next couple of decades. But, the probability is that, as the Irish economy grows faster than most other European countries, there will be a return to net immigration. An increase in immigration and a decrease in emigration occurred after the end of Ireland’s late 1950s recession and even more so after the end of Ireland’s late 1980s recession. It is extremely likely the same will occur this time. CSO population figures indicate that net emigration this time peaked in the year April 2011 to April 2012. According to the CSO, It fell somewhat in the year April 2012 to April 2013. The figures for the year April 2013 to April 2014 won’t be published by the CSO until August or September. I’ll predict now that these will show a very sharp fall in net emigration. All this leaves out the fact that in the years up to the last census in 2011, the CSO annual inter-census population estimates greatly under-estimated population growth and over-estimated net emigration. I won’t be the least surprised if census 2016 shows a similar outcome. Comparing the Republic of Ireland with Northern Ireland, currently Northern Ireland builds about 11,000 houses annually. This is considered too low to meet housing demand and the Northern Ireland Housing Executive is trying to increase it. The Republic of Ireland, with about 2.6 times the population, currently builds about 8,000 houses annually. To match even Northern Ireland’s rate of house-building, the Republic of Ireland would need to build 30,000 houses annually. On top of all this demographics, there is the increasing incidence of marital breakdown and divorce in Ireland. Historically, Ireland has had a very low rate of divorce, with far fewer 1-person households than any other European country, Largely because of this, the number of adults per household in Ireland has historically been the highest of any European country. This reduced the demand for housing significantly. There are far fewer households for its population size in Ireland than in any other European country, and, as a consequence, far fewer houses. Ireland has a population of 4.6 million and 1.65 million households. Denmark has a population of 5.4 million and 2.7 million households. The reason being that far fewer adults live alone in Ireland than in Denmark, because historically the divorce rate has been far lower. But, as I say, all this is now changing as loony-liberalism spreads out from its Dublin 4 heartland to infect the rest of the country. Until about 20 years ago, most people in Ireland, especially in rural Ireland, took their marriage vows seriously. Men stayed with their wives even when their good looks started to fade. But, as loony-liberalism becomes the dominant ideology in Ireland, all this is going by the wayside. In a loony-liberal society, it becomes quite acceptable to trade in your wife for a new and younger model as soon as she has her first grey hair. ln his latest blog, David McWilliams predicts that Ireland’s divorce rate will increase to the EU average in the next few years. I hope he is wrong, but, if he is correct, and added to the high natural rate of population growth, there will be an astronomical increase in the number of households in Ireland as 1-person households become more and more common. And, following on from this, an explosion in the demand for new housing. All this is a long-winded way of saying that the current level of house-building in Ireland is way below what is required to meet population growth (resulting from 2.8 times as many births as deaths) and falling household size (resulting from increasing marital breakdown). The recent surge in house prices (from a very low level) is simply a reflection of this. The scenario outlined above is already happening. It will continue in coming years and decades and the only way in which the rise in house prices can be arrested is by greatly increasing the number of houses built annually. There is simply no escape from the fundamental law of economics, namely that when supply falls short of demand , prices rise. But, rather than acknowledge that increasing house prices might have something to do with demand outstripping supply, Ireland is full of cranks peddling the line that its all a plot by Michael Noonan. And rather than justifying their large salaries by doing proper detailed projections for future housing demand, based on projections for the future increase in population and projections for how household size will be affected by increasing divorce, thereby providing some sort of badly-needed estimate of how many houses Ireland needs to build in coming years, Ireland’s economists prefer to argue about who did or who did not predict the fall in house prices after 2007, which is now totally irrelevant in the light of the accelerating housing shortage and surge in prices. That person, who made the analysis which did not fit with estab thinking was not treated well – put into the ‘whistleblower’ category….. @ All Speaking truth to power, as the saying goes, is difficult when the responsibilities of politicians and civil servants are blurred as is the case under the present governing legislation. cf. http://www.per.gov.ie/strengthening-civil-service-accountability-and-performance-submissions-received/ (The submission on behalf of the internal audit units is of particular interest). Until there is a return to the situation where heads of department can do so without fear of negative consequences, there will be no improvement in governance. This would include dispensing with so-called political advisers or, at the very least, confining their activities to their job description. @ John the Optimist “Until about 20 years ago, most people in Ireland, especially in rural Ireland, took their marriage vows seriously. Men stayed with their wives even when their good looks started to fade….In a loony-liberal society, it becomes quite acceptable to trade in your wife for a new and younger model as soon as she has her first grey hair.” Oh dear God, help us! Next Wednesday, 9 July, I will be 58 years of age. I don’t know if I was ever beautiful. I was never all that interested in how I looked anyway. My children, whom I would trust as generally good guides in that respect, tell me that I was; whenever they look at old photos from when I was in heyday in my 20s and 30s; though there are very photos. So perhaps those that exist are overly flattering, since my tendency from a very early age was always to avoid being photographed. Old friends, perhaps because they’re fond of me, insist I’m as beautiful as ever – which I guess you could take any which way! I know I’m old. I get tired too easily these days, which is very frustrating because I have so much to do. I have arthritis in my right hip, both ankles and in my knees. If I didn’t spend 120 euro a month on ‘my roots’, my once raven black hair would be stone grey. I’ve been married for over thirty years to someone whom one of my friends once described, accurately, as ‘the nicest man in Ireland’. (He’d want to be, wouldn’t he, since he has a lot to put up with!) The bloom of youth has long gone from him too. His once long red curly hair is now snow white. Relationships are not capable of being ‘commoditised’. In Spring, the leaves of the tree are perfect, each one programmed to produce the perfect flower and seed. Yet in Autumn, they are truly glorious. I don’t want to come across as angry with you, because I don’t know you. People’s relationships break down. The prohibition on divorce, introduced in the 1920s as part of a nationalist ideological aim to create the perfect ‘sinn fein ‘ society, was both brutal in its effects and in the lack of confidence which it displayed in the capability of citizens to make their own decisions, specifically ofd their human right to leave abusive relationships. The added spice, of course, was the priority of protecting land ownership and title, which also ‘justified’ the label of ‘illegitimacy’ of unmarried parents, with all of the consequences which we are now obliged to confront as a society. However, then as now, by the way, if you look at the literature on marriage breakdown, it is predominantly women who leave relationships and seek ‘divorce’ where that option is available to them. Let me tell you something else about Irish society of 1950s and ’60s, which I know from observing my own mother and her women friends, plus my husband’s account of his observations of his mother and her friends, and which is also amply reflected in Irish literature of the times: those women had well developed networks of their own peers. They looked out for each other. They provided, often necessarily in a clandestine way, support for one another. They exercised a form of power in society that was subtle and ultimately unmeasurable – largely because social observers and economists were not all that interested in it anyway, or didn’t realise its significance, or found it difficult to apply any technologies of empirical justification. What is did was that it that enabled women to support their friends and associates in the community without ‘male’ interference; to see one another through hard times, to club together in support, as required, and to deal with abusive relationships, as best they could, from wherever they emanated. They shared their experiences and their wisdom. My late father had a word for it, as I recall, of women ‘closhing’. I’m sure that’s derived from hiberno-english, but I’ve never been able to find a precise meaning for it, or its etymology. What I do know is that he clearly understood it and respected it! I’ve just come from the celebration of Joan Burton’s election as the leader of the Labour Party, a contest in which she received 77% of the vote. As she walked down to the Mansion House for the result to be declared, car drivers rolled down their windows,; people shouted from buses. Other passers-by stopped her on the street to convey their good wishes. You might not agree with a word she says – I often don’t – but it is her political resilience and her authenticity as a very ordinary Irish woman, that commands our respect. What she represents is what matters. To me, that is what my late mother and mother in law would have understood very clearly: we’re not capable of being commodified, and anybody who tries to represent us in that way is, frankly, quite delusional. Tonight I think they would have been very proud women. @ veronica Bravo! Old? You are in your prime. @ DOCM Very interesting link to strengthening civil service accountability. Take a look at the ‘John Dowds & Mr Allen Morgan’ submission (before it is taken down) where corruption is hinted at in property transactions. They make the case that the State is frequently ripped off in property transactions and no one is ever held to account. @ JtO Welcome back. That was a brilliant filleting of Prof. Kelly on the other thread. I have to admit to have been taken in by his dire predictions at the time. I can’t make up my mind whether the economic future for Ireland over the next 10 years is black, or rosy and you’re one of the very few outlining the case for the latter. I love to hear both sides of an argument. @Veroinica 58 is hardly old. You are to be congratulated on having the same husband as 30 years ago. However, couples such as yourself and your husband will be much fewer in number in a generation’s time. You were lucky to be married at a time when, thanks to the prevailing culture, marriage vows were taken seriously in Ireland. This is no longer the case. If you study the EU figures for the number of persons in older age-groups who are living alone (largely because of marital breakdown and easy divorce). It is far lower in Ireland than in other EU countries. But, this won’t last. However, if you read them properly, you’ll see that the main point of my comments was not about the morality of it all or the effects on society of it all (which isn’t really appropriate for this site), but about the effect on the demand for houses. It is a simple mathematical fact that increasing marital breakdown, divorce and a much higher proportion of 1-person households in middle-aged and older age-groups, such as now exists in most EU countries (much less so in Ireland, at least up to now, but probably for not much longer), increases the demand for houses because where two adults previously shared a house. they will now each require their own house. Its as simple as 1 + 1 = 2. I think it was Alan Ahearne who made much the same point a few months ago. As for Joan Burton, I’m sure she’s a nice woman. She can’t be any worse than the bigoted anti-Catholic Gilmore. I have no reason to doubt your account of how the announcement of her election has been acclaimed by the Dublin masses or of the tumultuous welcome she received from the crowds thronging Dawson Street when she did her walkabout. But, the fact remains: Labour is on 4 per cent in the polls. Hopefully, it will sink much lower than that by the time of the next election. Especially if she appoints Ivana Batty to the cabinet, as Shane Ross tweeted. I have no idea if that rumour is true, but please God it is, since that can only have the speeding up the Labour Party’s total extinction. @DOCM ‘Speaking truth to power, as the saying goes, is difficult … One wonders how you might possibly know! Now spinning power’s ‘truth’ (sic) is a different matter; one must bow to your experience here … @Gregory Connor … and what did you advise Gregory? @JohnTheOptimist McGuinness is thrilled that you are back punting for Fianna Fail … … any chance you might sort out the Ardoyne as well …. … and please desist from pulling Veronica’s fine leg before Blind Biddy finds out and we are all subject to a ‘closhing’! @Joan Burton Endorsing Veronica’s recognition of your ‘authenticity’, I wish you well. @Veronica The One-Eyed Shia_Sheik says: Hi! @Veronica You took the comments on marriage a bit personally. It reminded me of comments by Germaine Greer I was looking up today by coincidence. In fairness from the Female Eunuch, 40 years old! “The ignorance and isolation of most women mean that they are incapable of making conversation: most of their communication with their spouses is a continuation of the power struggle. The result is that when wives come along to dinner parties they pervert civilised conversation about real issues into personal quarrels. The number of hostesses who wish they did not have to invite wives is legion” I have abandoned dinner parties, though to be fair it wasn’t the fault of the poor wives and their frantic efforts to convince everyone they were happy, when in fact they were crushed and miserable by their existence; it was the men shouting their arrogant opinions at each other that did me in. 58 is not old. Sure you’ve nearly 10 years to go before you get the travel pass. though my mother (20 years older than yourself) has previously remarked on the claims that the masses have no money to pay water charges, but thousands to spend colouring their hair. Me included. I asked my hairdresser when I had social permission to stop covering my grey as I wanted to be liberated from the process. “Why can’t I be Christine Lagarde” I whined. “Sarah, you’ll never be Christine Lagarde”. Indeed. @John the Optimist, et al “You are to be congratulated on having the same husband as 30 years ago. However, couples such as yourself and your husband will be much fewer in number in a generation’s time. You were lucky to be married at a time when, thanks to the prevailing culture, marriage vows were taken seriously in Ireland. This is no longer the case.” I wish to remain courteous, but I’m finding it increasingly difficult. Again, I would not wish to impugn any motives or attitudes to you unfairly. You’re not from Cork , are you? But please do not patronise me. When my first child was born ‘out of wedlock’ in the early 1980s, the level of prejudice, innuendo etc. and the practical/legal difficulties encountered in registering/establishing the child’s paternity, were burnt into my consciousness for all time. It was quite appalling! I don’t want to be reductionist about this, but I reckon that women basically choose their life-partners on whether they will be good fathers to their children. I’m certainly entitled to make that assumption, considering some of the the ones you have been making as regards physical attributes/attractiveness etc. I don’t know if you are married. Its boundaries, its leaps, its emotional chaos, and its resolution, or ‘smoothing’ of such difficulties over time, and with experience and wisdom, between the partners are, to my mind, what marriage is all about in the end. Which is why, nobody can really understand it. I don’t think that people like myself, or my husband, will be ‘scarcer’ in 10-100 years time. I can’t agree. The whole point, it seems to me is that the longer you choose to live with a mate the more you begin to understand about yourself and the true richness of what it means to be alive. What might then turn out to be scarcer are bad liaisons; and that’s no end of a good thing. Hence, I’m in favour of making divorce easier, rather than more difficult in situations where relationships just simply don’t work out. My argument with you, however, is about an idea of commoditising women. It’s wrong from the get-go. @ David O’Donnell I wouldn’t advise anyone to pull my leg – I’d scream to the bleedin’ rafters! As for politicians in general, I have a great deal of respect for people who are prepared to take a ‘bath in public’ and put themselves forward for the prospect of ultimate humiliation/triumph. Plus, losing their personal privacy and any hope of a normal life, for themselves or their immediate family. I wouldn’t do it. Would you? Or your darling alter-ego, Blind Biddy? Don’t rob me of the celebration of Joan’s triumph. I know what the lovely women who are now gone would have thought, and perhaps people like my father too, who was an official with the rural workers union, ‘closhing’ and all. @Sarah Carey Ah Jaysus! Listen mate, I was reading Germaine Greer when the likes of you was in nappies. I had no time for her then, or her reductionist generalisations about feminism, and I have even less time for her now. Sarah, there are more serious issues involved in this. Believe me, ‘sensitivity’ on a personal level doesn’t enter into it. Commodifying Irish women in this way is just not acceptable. As I see it, I had no choice but to respond to JtO, and challenge his perspective. The history and the ‘lived experience’ of Irish women run counter to his representation. What I think is really interesting though, is that there is this hidden history of women in Ireland. I know a lady – my godmother – who’s over 90 years of age now, but what’s she’s seen and lived through, and her perspective, is fascinating. I guess I get worried about this: we lose out on the wisdom of older people. They’ve been through a lot and they have views that are both original and worthy, from which we might learn a few things. As for being 58 – yeah, man!! Only two years to go to 60. ..and where ‘rural ireland’ is stand in for the ordinary working people (alriiight) Just to add, the “Irish media loudmouth conglomerate ” is the media mafia leftover from the troubles enconsed in jobs for life at the sindo/ST et al .. not specific to SC above. (in case it read that way) Id just like to double down though on jto being nuts. I mean can anyone run the numbers here.Demographic changes and the Irish property market isnt something I know a lot about, but what effect could a (plausible) rise in the rate of divorce have on macro trends ? It’s pure ejitry. What is this site? Somewhere to see economic analysis or somewhere to see personalised attacks and demented Iona Institute meanderings? @JTO Thanks for your comprehensive reply. I take your point on divorce, it’s something I hadn’t considered. Though your articulation of the reasons why it’ll increase leave a lot to be desired, as Veronica points out. Can’t you say the same for the birth rate though? If we’re progressing toward the European average on divorce why not births? eg I come from a family of 4 kids but I and siblings will be very unlikely to have more than 2, if we have any, in our respective families when we start. You state ….’Looking at the actual figures, there are approx 70,000 births annually in Ireland (down from 74,000 a couple of years ago) and 29,000 deaths. The natural rate of increase of population (assuming zero net migration) is approximately 40,000 to 45,000. Over a decade, that’s a population increase of almost half a million (I repeat, assuming zero net migration)’…. As I’m sure you know that the birth rate is currently declining. 76k in 2009 68k in 2014 It is also down in the first 4 months of this year and looks set to come at 66k. In addition to a growing tendancy for families we currently have less 20 something’s, which means less women in the next 10 years giving birth than the last 10. So wouldn’t one expect births to continue to slide from here, once we combine the fewer babies per woman and fewer women stats? Making your 500k in 10 years look a bit much. Finally we know half or more of current property sales are done in cash. I don’t know about you but I don’t know many 20 something’s and/or young families sitting on 300k in cash. So not all demand is due to demographic pressure, a lot of demand is obviously coming from ‘investors’ aka cash rich civil servants, that don’t want to pay high rates of Dirt or who want to take advantage of Michael Noonans capital gains sweety. Some of this thread seems to have wandered too far off topic. Prof Connor maybe its me but there seems to be a lot of playing the man going on Yes I agree but I do have a delete button, if necessary. @ Elia The submissions make for an interesting read but only one – the contribution on behalf of the internal auditors – addresses the fundamental question; the accountability of BOTH the political and administrative leaderships of departments and the management of the relationship between them. One cannot be examined, as is currently underway, without the other. My own view is that the Public Service Management Act 1997 needs to be scrapped as it conflates the respective roles when absolute clarity is required. What is worse is that it imposes a particular – and dubious – management approach (visions, strategy statements etc.) on a totally heterogeneous public sector. The situation is compounded by dividing the fundamental task of finance – the raising of taxes and the control of expenditure – between two ministers from competing coalition parties. The only strategy is that there is no strategy! And none is even on the horizon as facing up to the political implications of the country’s economic situation is not on the agenda. cf. http://www.irishtimes.com/business/economy/bundestag-committee-claims-ireland-has-no-plan-for-growth-1.1856046 @GC “Some of this thread seems to have wandered too far off topic.” I didn’t start it but gave into temptation. Apologies. Back on topic: What did happen to Ms Mackle? On the subject of troublesome women, a favourite subject of mine, I hope she wasn’t blacklisted….. @JohnFoody Your well-argued scenario in which the number of births in Ireland declines to much lower levels than currently might prove accurate, or it might not. I simply don’t know. Only time will tell. There are lots of factors that will influence it, economic, cultural, demographic et. However, as far as housing demand is concerned, even if it did happen, it wouldn’t hugely affect the demand for houses for approximately 20 years (few 10-year olds buy their own house). As far as housing demand is concerned, a more relevant metric is the size of the population aged 20-plus. As we already the know the number of persons born in Ireland in the past 20 years, the size of the population aged 20-plus wouldn’t be affected by any decline in the number of births from now on for 20 years. Although I would totally agree that, if it did happen as you suggest, it would start to affect the size of the population aged 20-plus from then on, and this would impact on housing demand from around 2033 on. But, as I say, it is by no means certain that the number of births will decline, although it might (in the way you outlined). There are economic factors that affect the birth rate as well as demographic/cultural factors. Usually the birth rate falls in recessions and then recovers. Let’s look at the number of births in Ireland since 1970. 1970 64,284 1975 67,178 1980 74,064 1985 62,388 1990 53,044 1995 48,787 2000 54,789 2005 61,372 2010 75,174 2011 74,033 2012 72,225 2013 68,930 So, as you can see, the number of births in Ireland fell very sharply during the 1980s recession (from 74,064 in 1980 to 48,787 in 1995). But, then rose equally sharply during the Celtic Tiger boom (from 48,787 in 1995 to a peak of 75,174 in 2010). Since 2010 it has fallen again (to 68,930 in 2013). The fall during this recession is much less so far than in the 1980s recession. I have no idea if it will continue to fall or will start to increase again now that the economy is recovering and unemployment is falling. It partly depends on non-economic factors as well, such as who comes out on top in the culture now waging in Ireland between pro-life and pro-abortion groups. I am encouraged by the very sharp fall in the abortion rate among Irish women in the past decade. So, I’m not saying that your suggestion that the number of births in Ireland will continue to fall post-recession is wrong, merely that it is uncertain and that, based on the trend following the last recession, a reasonable chance that it will be reversed. Turning to your point about Ireland having less 20-somethings, this is a good point. But, the numbers are not dramatic. These are the CSO figures for the female population in age-groups 0-19 and 20-39 (the main child-bearing age) in Ireland in 2013: 00-19 626,900 20-39 676,600 So, in 20 years time, if there was zero net migration (and ignoring the very small number of deaths that will occur in the age 0-19 group), the female population would fall from 676,600 in 2013 to 626,900 in 2033. This is a moderate fall (7.3 per cent), but not huge. However, the 676,600 figure for the female population in the 20-39 age-group in 2013 is much greater than the number of females born between 1973 and 1993. It was boosted in the meantime by substantial net immigration. It would only take a relatively small net inflow during the prior 2013-2033 for the female population in the 20-39 age-group in 2033 to be actually higher than it was in 2033. I obviously don’t know if this will happen, but it could well. However, as I said above any fall/rise (both are possible) in the number of births in ireland from now on won’t affect the demand for houses until those born post-2013 start to enter the housing market from around 2033 on. So, to some extent, all the figures above are irrelevant to housing demand until around 2033 (although they might affect marginally the size of houses required). Up to 2033 the demand for housing will be overwhelmingly determined by trends in the population of those already born in 2013. So, lets’s look at that. The following are the CSO figures for relevant population groups in 2013: 00-19 1,282,200 65 plus: 568,100 So, there is already a huge surplus (714,100) of persons that will enter the age-group 20-plus in the next 20 years over the number who are likely to exit it (through death). OK, this isn’t precise because some persons under age 65 in 2013 will unfortunately die by 2033, while some persons age 65 or over in 2013 will not die by 2033 (also, a relatively very small number of those in the age-group 0-19 in 2013 will unfortunately die by 2033, but this number is so small it can be disregarded here) . Another way of looking at it is to look at the number of deaths annually in Ireland. This has averaged around 28,000-29,000 in recent years. Because of the increase in the number of older people, this will probably increase in coming years. But, lets say it averages 35,000 in the next 2 decades. That’s 1,282,200 currently aged 0-19 who will enter the age 20 plus population by 2033 and 700,00 who will exit it through death. A net increase in the age 20 plus population of 582,200 by 2033. The analysis above is necessarily very crude. So, lets look at the latest CSO projections which are much more sophisticated. They don’t give projections for the age 20-plus population by 2033 (which is what I did crudely above), but they do give projections for the age 15-plus population by 2031 (the closest I could find). They don’t just give one projection, but six. Each projection is based on a different assumption about fertility and migration. The more pessimistic ones assume net emigration every year between 2011 and 2031. The more optimistic ones assume net emigration up to 2016, but then followed by net immigration (at a much lower level than pre-2007). The CSO label these projection M1F1, M1F2 etc. The CSO figures are: population aged 15-plus in 2011: 3,598,200 (actual from census 2011) population aged-15 plus in 2031: (CSO projection) M1F1 4,569,600 (increase of 971,400 between 2011 and 2031) M1F2 4,564,900 (increase of 966,700 between 2011 and 2031) M2F1 4,303,200 (increase of 705,000 between 2011 and 2031) M2F2 4,298,500 (increase of 700,300 between 2011 and 2031) M3F1 4,075,000 (increase of 476,800 between 2011 and 2031) M3F2 4,070,300 (increase of 477,100 between 2011 and 2031) So, under the CSO (not mine) projections, the population aged 15-plus in Ireland will rise between 2011 and 2031 by approximately a million (on the most optimistic scenario), by approximately three-quarters of a million (on the medium scenario), and by approximately half a million (on the most pessimistic scenario). So, even if there was no increase in marital breakdown and divorce, there would still be a huge increase in housing demand in Ireland in the next 20 years. Factor in the likely continuing fall in the number of adults per household and the likely continuing increase in the number of 1-peson households that is the inevitable consequence of the increasing marital breakdown/divorce rate, there will be a veritable exploding in housing demand in Ireland in the next 20 years. All this has already been happen for some time of course. The population has been rising since 1961 and, because of the continuing fall in the number of persons per household (partly fewer children, party fewer adults because of increasing marital breakdown/divorce), the number of households in Ireland has skyrocketed since 1961. These are the CSO census figures for the number of households in Ireland since 1961: 1961 676,402 households 1971 726,363 households 1981 896,054 households 1991 1,019,723 households 2002 1,279,617 households 2006 1,462,296 households 2011 1,649,408 households So, the number of households in Ireland rose by 143.9 per cent between 1961 and 2011, which is much greater than the population increase in the same period of around 63 per cent. Given the CSO population projections above, and the likelihood of continuing increase in Ireland’s marital breakdown/divorce rate, it is almost inevitable that the number of households (and therefore demand for housing) will continue to skyrocket up to 2033 at least (after that it will be affected by the trend in the number of births between now and 2033, which is impossible to predict). I am obviously unable to predict the extent of the likely increase in the marital breakdown/divorce rate in coming years as loony-liberalism tightens its grip. David McWilliams predicts that it will increase to the average EU level in the next few years. He might be right. He might be wrong. But, I’ll throw in a figure to ponder on. In Ireland the average number of persons per household was 2.78 in the 2011 census. In Denmark its 2.0 (partly more abortions and fewer children per household, partly fewer adults per household because of historic much higher marital breakdown/divorce rates). If either had the same number of persons per household as Denmark, it would now have 2,300,000 households instead of 1,650,000. So, the impact of increasing marital breakdown/divorce on the country’s housing requirement is huge. Add in the CSO projections for Ireland’s population growth, and the shares in Irelands house-building companies that I bought in 2009 look one hell of a good investment. To summarise: (1) the house-building rate in Ireland is currently a small fraction of the historic and likely future new household formation rate (2) this is the root cause of the upsurge in house prices in the past year (3) barring economic collapse and unprecedented net emigration between now and 2033 (which is always possible but, based on the recent GDP figures, very unlikely), the only way that this increase in house prices can be arrested is by a massive increase asap in the number of new houses built annually in Ireland to at least 30,000 (and even higher if the likely coming period of economic growth attracts a flood of immigrants such as the last one did. (4) rather than demonising builders and developers, pillaring those who failed to predict the global economic downturn post-2007, or inventing crackpot theories about how the rise in house prices is being artificially orchestrated by builders and developers, estate agents, Michael Noonan/NAMA/Fianna Fail, banks (take your pick), interested parties would be better advised to recognise that it is a fundamental supply/demand imbalance that is causing the surge in house prices and to devise measure to rectify this imbalance by increasing supply dramatically. If this involves bringing Ireland’s builders and developers in from the cold and restoring the Galway tent, so be it. It is almost 60 years since Thomas Kenneth “Ken” Whitaker became secretary of the Dept of Finance at the age of 39 and not one of his successors since have matched his instinct for radicalism and independence when it was needed in times of adversity. In 1956 the tax exemption on export profits was introduced, which was the first significant move in the transformation of the Irish economy. Derek Moran is said to be a tax expert and he must have done a competent job to climb the departmental ladder. During the bubble he may well have believed that annual credit growth of almost 30% was OK or if he had shared the fears of Charlie McCreevy, when finance minister in 2003: “The period of exceptional economic growth enjoyed by Ireland is over” – – by 2006, he could have been trying to avoid bitter truths being presented to Brain Cowen, the finance minister. http://www.irishtimes.com/news/politics/mccreevy-decentralisation-plan-unveiled-hours-before-budget-1.1851376 The department needs more than an administrator and Moran shouldn’t have been selected for the job – – Tánaiste Burton will be in a position to veto the appointment. Last year Prof Frank Barry in a paper, ‘Politicians, the Bureaucracy and Economic Policymaking over Two Crises: the 1950s and Today’ compared the disastrous Irish policy making of the Lilliputians of recent times with the times of giants like TK Whitaker. Barry said the philosopher Plato could not explain ‘where he would find the wise men who would govern his ideal state’. Experience since seems to show the best results come from the paradox of competing sources of power jockeying for their own advantage. He added that this is the key that draws together the findings of the three independent reports of 2010 and 2011 into the weaknesses and failures of the Department of Finance, the Central Bank and Financial Regulator – – besides ‘deference and diffidence’, the reports refer to ‘groupthink’. Prof Barry said that this is less of a problem of course if the institution in which it prevails is only one voice in the mix. The paper says: “As far back as 1987, TK Whitaker said that he would like to see “a restoration of the old (civil service) principle that you were independent of ministers. You gave your views on any new proposals fearlessly, critically, honestly. You did not care whether your views were likely to commend themselves to the minister, whether for their own sake or politically. Once a decision was taken by minister or government, however, you carried it out as loyally and efficiently as you could. That was my understanding of the function of senior civil servants but I’m afraid it has been undermined. The young men who are preoccupied about this generate deep disappointment in me by telling me that that was an old world that has vanished. In the new world, the civil servant is all the time trying to please the minister, over-conscious of what might be politically acceptable, arranging the options so that they will appeal, rather than in strict order of eligibility” It would surely be a good thing! Frank Barry’s paper http://www.ssisi.ie/Barry_SSISI_MARCH_2013.pdf @ JTO You’re basing some of your numbers on the premise that once an Irish citizen reaches 20 they have to acquire a unique unit of accommodation. In 2011 about 42% of Irish under 30 live in the home place (the figure is 25% in Denmark), not surprising considering the high cost of accommodation. A figure that is probably higher now and likely to rise further. The figure is about 79% in Italy, so there’s scope for it rise further as rents get more ridiculous. http://bit.ly/1ileL9r Of course, It’s impossible to tell but another chunk of 20 somethings probably spend their 20s ‘travelling’, studying/working abroad, learning to be a scuba diver in Thailand, drinking in an Irish bar on Bondi beach or wasting their time generally pissing about some where. Which may or may not be offset by others doing the same here, it most likely wasn’t offset in the last 5 years but might be in the next. I do broadly agree with you though, supply needs to increase dramatically. I hope it does, as it is the best way to get property prices back down to an affordable level. Though hopefully not in the great Galway tent tradition of haphazard energy intensive one off housing and estates 2 hours from jobs. As you point out, property sizes will not need to be of the 5 bed mansion variety, as households numbers will likely be smaller in the future, so proper built/sized (not Liam Carroll 30sqm) 2/3/4 bed apartments will suffice, as long as they’re near plenty of amneities. Finally in your efforts to give a kick to a few commentators, you let too many people off the hook. M.Noonan encouraging property price inflation is something I consider as a pretty big offence. As a minister for finance he should be concerned with property prices rising faster than wage growth, not encouraging to. @ MH A very interesting paper by Frank Barry. The “clash of ideas” and “deference and diffidence” do not, however, get us very far. A more immediate approach night be to invite the commentariat to carry out a thought experiment; can they imagine Schaeuble (CDA) sharing his finance portfolio with Gabriel (SPD) or Osborne (Conservative) with a nominee of the Liberals? If not, the question is then why can it be possible in Ireland? The answer is very uncomfortable. The current body politic cannot get its mind around what it means to be an independent – financially that is – state. The generation to which Frank Barry refers had no such difficulty. @ MH By the way, one could add that it is a mug’s game as far as the junior participant in any such arrangement is concerned. DOCM, Danny Alexander is chief sec to HMT in charge of public spending and a member of the cabinet. He is a Member of the junior partner in govt. Facts are so inconvenient. @ TMD I stand corrected insofar as I need to be. Were Howlin a MOS in the Department of Finance, your point would be valid. There is still only one UK Treasury and one Bundesfinanzministerium (unless I am misinformed). The task of raising revenue and controlling expenditure of it is not divided between two ministers of equal rank from different coalition parties (and members of an inner cabinet that has no basis in the Constitution). Facts are indeed inconvenient. @ All I have posted this link on the Swedish experience of financial reform post a budgetary crisis on several occasions. https://www.bportugal.pt/pt-PT/OBancoeoEurosistema/Eventos/Documents/LJonung_paper.pdf @ All Pat Leahy is in top form in his commentary in the SBP. His conclusion deserves a wide audience. Which it almost certainly will not get. “I think there is one skill above all that the coalition has to re-learn: the ability to say no. Recent attempts to regain popularity have reeked of ”old politics – abandoning tough policies which will offend and disadvantage some people, and taking populist decisions without regard for their financial cost. The U-turn on medical cards was a classic example of the genre. James Reilly’s pledge to move to an illness test for medical cards (in response to the furore over his botched review of existing cards) is both an unworkable and unaffordable policy which would not be essayed by a serious minister in a serious government. It is a textbook example of precisely the political flaw that contributed so much to our difficulties -“ a willingness to pursue short-term political gain at the expense of good long-term government. The well organised interest groups which have held such sway over the policy-making process in Ireland have noted well the government’s weakness, and its improving financial position, and are piling in with their requests and demands. The dire necessities of the troika years held them largely at bay, but it is in the DNA of our political system to accommodate them.” DOCM, Your beloved Germany has introduced a minimum wage and lowered the pension age to 63. Is that not an example of pandering to vested interests that you attack the Irish govt for. @ Gregory Connor I’m surprised this entire thread hasn’t been deleted by now. Probably the only thing that has prevented this is that the article was published in The Irish Times and the information cannot be hidden. You can kiss goodbye to ever being invited by the DoF to sit on a committee or to being appointed to a State board. @Gregory Rather more interesting, longer article, here: http://www.independent.ie/opinion/analysis/whistleblowers-dire-warnings-silenced-by-senior-finance-chiefs-26845568.html @Sarah The answer to your question appears to be supplied in the article I linked to above. fyi Jobs Minister Richard Bruton has defended the appointment of five Coalition cronies to state boards in the past week by his colleague Phil Hogan. – http://www.independent.ie/irish-news/politics/jobs-minister-bruton-defends-crony-appointments-to-state-boards-30409860.html This is the guy who, before the last election, promised reform of governance in this area and that such appointments to state boards would be advertised. Now he simply punts for the multinationals, reduces craft skills to minimum wage levels, and out Fianna Fails Fianna Fail. @JohnTheOptimist Morgan Kelly was, I agree, a little off in his timing re the emergence of a Right Wing Anti-Traveller Government – this is what we have right now; with average cuts @7-10% – Traveller supports have been cut by ~80%. p.s. best with Lucinda_mickpd – good to keep coalition options open for the future … @grumpy Ta for link. It concludes: “Mr Pye said he was told his concerns were “legitimate”, but “simply untenable on political grounds”. Mr Pye described how good people were rebuked for questioning government policy and an environment of “unquestioning obedience” was promoted. Ireland’s downfall, he said, was due to an “appalling” inability to inform the government of the “sheer recklessness of its policies”. Tomorrow Ms Mackle will go to work as usual in the department. If her voice had been listened to Ireland might not find itself in need of an overseas bailout. Nor find its young people emigrating again or its dole lines getting ever longer. – @Ms Mackle & Mr Pye Well done! …. and, of course, “policy” (sic) may be traced back to that 2003 Report, chaired by Michael McDowell SC, PD, which strongly advocated ‘Light Touch Regulation’ (sic). Anyone have a link to that ‘report’? Any dissenting views within the DOF on the current Dublin house price bubble, or is it the “consensus view” that “we need house prices to go up another bit”. How about asking Ms Mackle if she has any views, or has she been confined to a nunnery. fyi Michael Taft in fine form …Stag-covery (n): a situation where statistical recovery occurs within a persistent economic stagnation – http://www.irishleftreview.org/2014/07/04/stagcovery/ not very Elk_ish – well worth reading. @Gregory O’Conner I agree it is inappropriate to demonize all those who “got it wrong” in supporting disastrous government policies during that period. On the other hand, it is important to have in place an objective civil service support staff for the banking inquiry, for example. Well I would disagree that it is inappropriate to “demonize” people who “got it wrong”, given that “demonise” really means “do anything other than welcome back with open arms the returning heroes of boomtime past”, and “got it wrong” really means “completely and utterly failed in their businesses, roles, fiduciary and civil duties and afterwards inveigled their way into getting the rest of us to carry the can”. Our new DoF chief is not the only Celtic Tiger First Officer to now be appointed into his former bosses post. Oh sure, we’ve had a period of outside appointees, the departed Moran, Matthew Elderfield, etc, But that interregnum is now evidently over, and we are back to the happy Ireland of No Blaming, No Learning. Is this a bad thing? For the returned debt free Developers, Public service lifers, buy-to-letters, and all the boom-time cheerleaders and optimists among us, of course it isn’t — it’s great. The return to easy money, loose regulation, and friends back once again in high places can mean only good times ahead. Of course, for the unborrowed masses still paying for the last crisis, the sudden return of the Celtic Tiger Funfair and Circus might evoke an ominous sense of doom. Those whose livings are based on outdated notions of Adding Value, whose assests and tax reliefs are few, who face once more into the breach of a rent and housing bubble might fail to be inspired or comforted by a return to the happy days of “If I have it I spend it”, “They’ll never go down”, and “Go away and commit suicide”. They might take some comfort if lessons had been learned, regulations put in place, measures taken to prevent another catastrophe. But alas, nothing has been done, and nothing learned. We’re back with the same policies, driving the same boom, for the same reasons. And when the bubble bursts again, we will have no new laws, no new money, and no new people to deal with it. Just the same old insiders, same old responses, and same old crisis — this time with smartphones. If only we had “demonised”, just a little bit. Held someone to account. Questioned our ideals and ideas. But apparently it’s more mature to say “Mistakes were made”, pay up quietly, and move on. @ DoD Wasn’t the crash the fault of the honours maths boys ? http://www.irishtimes.com/debate/letters/honours-maths-for-primary-teachers-1.1782078 I don’t know why but the DoF reminds me of the film of “the Field”. @ Sarah “Sarah, you’ll never be Christine Lagarde”. I don’t know if she is either . http://www.youtube.com/watch?v=rHiCX46vukU She was Sarkozy’s finance minister. And the crisis was hard on a lot of carefully constructed images of competence. “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.” The IMF is as much in the dark as the Central Banks as to how this is all going to pan out. It’s certainly not unique to Ireland that it usually pays to go with the flow and that applies in private and public sectors. People who personalise differences of professional opinion are found everywhere as are jealousies about promotion and so on. “You want a friend in Washington? Get a dog,” President Harry Truman is reputed to have said. Whistleblowers are praised by some in the abstract but the evidence is that even the ethical in organisations despise them as traitors. So for most people unless they have the hide of a rhinoceros, becoming a whistleblower risks wrecking a life. William H. Whyte (1917-1999), was an editor of Fortune magazine when he wrote ‘The Organization Man,’ his best-selling 1956 book that challenged the claims of entrepreneurial daring in business by describing the increasing bureaucratization of white-collar environments: board rooms, offices, laboratories. In his view, the entrepreneurial spirit had been replaced by ”the modest aspirations of organization men who lower their sights to achieve a good job with adequate pay and proper pension and a nice house in a pleasant community populated with people as nearly like themselves as possible.” People like that tend to think and vote the same as Dr George Gallup twigged to in the 1930s and like Michael Noonan, they share a conservative mindset. It’s interesting that in communist societies conformity was/is also the name of the game and people who are different such as gays are repressed. Recessions are rare; black swans are rarer and in the buck stops nowhere Irish system, what better illustrates it when the State is both suing groups for negligence or incompetence while also giving them business 😯 @ David O’Donnell http://www.djei.ie/publications/general/2001/sra/ Ireland house prices raise fears of a new bubble http://www.ft.com/intl/cms/s/0/96d5b868-fc81-11e3-98b8-00144feab7de.html @Michael Hennigan http://www.djei.ie/publications/general/2001/sra/ Thanks for that: Citizenry paying a shocking price for the Market Fundamentalism of McDowell, Harney & McCreevy ….. and Bertie’s addiction to Power …. Methinks this fundamentalism extended to ESRI & Academic community …. and it hasn’t gone away you know …. @OMF, seafoid ‘Nothing Happened’ – Joseph Heller @Michael Hennigan ‘… the buck stops nowhere Irish system … The purpose and raison d’etre of the Irish System of Law & Justice is to ensure that the ‘bucks’ emerging from the Systems of Money & Power are re-directed, if at all, to the accounts of the lumpen proles aka The Citizenry and never to the upper-echelon originators of said fu*k ups. @ DOD “Methinks this fundamentalism extended to ESRI & Academic community ” One of the things the Monthly Review crowd talk about in terms of the system is abstract wealth, as if it’s independent of reality in terms of those who are chasing it. My take on it is that it’s an article of faith like the angels on a pinhead – a lot of market players/finance people/economists – not all, but far too many – they buy the notion that as long as the Fed or some other crowd in sober suits are running the show everything is basically fine and trend can go on indefinitely , risk can be controlled, it’s sustainable. Contingency doesn’t get a look in. And that belief filtered down to the DoF and estate agents and the media. And then reality intervened and TSHTF. And it turns out no financial asset has an intrinsic value, it all depends on liquidity. But that’s very had to model innit. @seafóid Blind faith in ‘abstractions’ tends to eventually hit a ‘real brick wall’: at its core, this is a problem of ‘false ontology’ and the social scientific community is riddled with it. It is kept alive by the System of Financial Power as it tends to support the interests of said system as distinct from supporting the interests of humanity; humanity doesn’t even enter its equations and is simply foot-noted as an ‘externality’. Regarding the DoF, part of the Civil Service – John Kelly said once that the CS was a machine left behind by the British. Modelled on Whitehall of course And the same sort of institutional thinking “Whitehall’s resilience has been built on the motto never apologise, never explain. “ seafoid, All there is no problem at all with excessive house prices in Dublin, and the lack of affordability, even with excessively low mortgage rates in this very moment. All of that can be cured easily by some tax cuts “Ireland employers’ group calls for end to austerity in budget” http://www.ft.com/intl/cms/s/0/d0250f26-05b7-11e4-9baa-00144feab7de.html?siteedition=intl#axzz35JBWxz00 After all, every Irish brethren of the tea party knows: deficits don’t matter As Dick Cheney testified, always a source of inspiration. http://en.wikiquote.org/wiki/Dick_Cheney You know, Paul, Reagan proved that deficits don’t matter. We won the mid-term elections, this is our due. @ francis FYI https://www.irishtimes.com/business/economy/germany-rules-on-economic-planning-but-irish-opportunism-makes-sense-1.1857359 Or, as we say in Gaelic; An té nach bhfuil láidir ní folair dó a bheith glic. Whoever is not strong must be clever. P.S. I do not agree with the analysis advanced, only with the conclusion. @ francis Also FYI http://www.tagesschau.de/inland/maut-106.html This is the type of approach that will eventually kill the EU stone dead if it succeeds. In short, either the full EU treaty menu is accepted or the restaurant closes. This is equally true of the ongoing dispute with the Commission with regard to the EU competition implications of the proposed German renewable energy policy. Failure should never be rewarded. Operating deficits definitely matter. A different story altogether are capital and carrying costs for infrastructure that has a useful life beyond the term of the bonds raised to fund them. Precise cost benefit analysis can be done with bonds as low as 2% for 50 years. There are two truisms at the moment borrowing will never be cheaper and energy will never be cheaper. We are living in a goldilocks few months. I am talking about Transit, water, sewage, hospitals, hostels for the homeless, bridges/roads (not to nowhere or islands off Mayo). Surely our Gov’t, which a majority of us voted in, can distinguish between wasteful and useful investments. Fracking will be gone in the blink of a geological eye. @Seafoid Re: The Irish CS being cast in the British mold. Having been there and seeing it up close the CS can turn on a dime between Marxism, Socialism, Capitalism, Fascism and many other isms. Turning from incompetent to competent takes longer. The PM/Taoiseach is King and the Ministers are Princes beholden to the King. The CS reports to individual Ministers through the Deputy Ministers and Assistant Deputy Ministers, In the right hands think of it as a dictatorship, if laws get in the way they can be rewritten (amended) or abolished. Never forget that the CS does what their political masters tell them to do or the DMs’, ADMs’. Directors’ get shown the door. In Kerry we wrote off the British and declared them dead for all time at 25 th anniversary celebrations in 1947. For years now in Kerry if you bring up the British as an excuse they do not hesitate to tell you we buried them in 1947. As I heard it the graveyards were thick with gun smoke as volley after volley was fired by what at the time were mostly FCA with some irregular support. Bands were in attendance, speeches were given and marches were held. The bars were full all day and all night. Dem were the daze when the Publicans coined it. I know NI is still in our craw but that should not have a bearing on how we manage the 26. Back to the DoF The late American historian Daniel Boorstin, wrote in an essay, “The Amateur Spirit and its Enemies,” published in his book “Hidden History”: “In the United States today there is hardly an institution or a daily activity where we are not ruled by the bureaucratic frame of mind —caution, concern for regularity of procedures, avoidance of the need for decision”all of which, Boorstin suggested, was best summed up – – “on a sign over the desk of a French civil servant: ‘Never do anything for the first time’.” Great quote! @ DOCM thanks for the pretty interesting link. What I read is a pretty robust attitude to the law, and that many commenters realize, that this serves only a small part of irish society, for a short time. To that road tax project(your tagesschau link), which will not produce significant tax income, but significant bureaucracy. This is basically driven by angry bavarian voters, who pay for many years now steep road tax in Austria and Italy, (One time Brenner 36 Euro) and see their Autobahn used by 50% foreign travel. The law can be made of course conformal with EU rules, and the Austrians to complain first about the plans, that really has something : – ) With the renewable energy thing, there was a recent ECJ ruling about something very similar in Sweden/Finland. WE had this in this blog before, that German corporations pay already significantly higher electricity cost than in neighbor countries, remember? What makes this Spanish Almunia stand vicious, is that he threatens to create regulatory , massive cost uncertainty retroactively, if not either the renewable subsidies are killed by using competition law, or Germany is willing to massively subsidies foreign energy producers. And to try this with a regulatory FUD strategy of torched earth, exploiting timing sequences. As people in this blog know, I am certainly no green fanatic demanding renewable built up at any price, and I am pro EU wide coordination, but this Almunia irks me, considerably. Why incentivise failure?. DOCM, green European political competence and style, the youtube is a hoot, not even the Spiegel can ignore : – ) http://www.spiegel.de/politik/ausland/europaparlament-youtube-clip-mit-ska-keller-und-jan-philipp-albrecht-a-979709.html @ Sarah Carey “Great quote!” Yes indeed; seafóid and myself may have the same reading material. I last used the quote here in Aug 2013. I have a copy of ‘The Americans: The Democratic Experience’ (1973), and before self-rule, we had run several of the big cities in the US northeast. Daniel Boorstin wrote: “Although the Irish were quickly and spectacularly successful in politics…they did not prove masters of the arts of good government.” Boorstin said in the third of his American history trilogy, that the Irish politician made himself into “a social service or more precisely a personal service agency.” Seem familiar? @ francis The competition rules must be the same for everyone. The personalities involved in their application clearly matter but the fundamental issue is the degree of respect for them. This where Germany falls down and, indeed, is far from being alone in this respect. The fact is lost in the many other largely undeserved criticisms directed at the country. @ francis et al Colm McCarthy on the subject of Germany’s assumed responsibilities. http://www.independent.ie/opinion/comment/responsibility-for-flawed-design-of-eurozone-rests-with-germany-30409067.html There is, of course, another more persuasive view in my opinion best summed up in the immortal phrase of Harry S. Truman “if you cannot stand the heat, get out of the kitchen”. All countries are viewed as equal, and sovereign, in an EU treaty context. To quote newly-elected Irish MEP Brian Hayes, ex Minister of State at the Department of Finance, in the weeken end Sunday Times; “if you sum all the [Irish state] debt, it is about €200bn but the banking element of that is only about €50 billion. So, only a quarter of our debt pile is related to bank shares. Even if we got a deal on a portion of that bank-related debt in tomorrow, it wouldn’t fundamentally change the deficit position, or the amount of money the government would have for public spending”. The chances of such a deal seem are minimal, a fact that the MEP seemed to confirm. “We have to be creative in looking for support, and be open to looking at a range of options to benefit the Irish recovery and the debt position”. This seems entirely logical. Especially as Ireland can now borrow money at a lower cost than countries that would be contributing to any retrospective re-capitalisation of Irish banks. M. Laval, 50 yards would go a long way towards restoring debt stability here. Your quote from Truman reminds me that it he was the Prez who chose the direction of the Marshall Plan over Morgenthau or worse. Without him, Francis would be a coal miner in the Don Bass. In contrast, Germany seems to be implementing something closer to Versailles in the current times. Delenda EU est. @Shay Intellectual heavy-weights such as Hayes and Creighton do us proud in URup by smiling for the cameras, extolling the strength of the Irish banking system, and wearing the burden of a mere 50% GNP odious financial system imposition on the Irish Citizenry with stoic gay abandon. To give Pascal his due – he tends to keep his mouth shut. @DO’D With Enda’s “mind” on his next head patting experience in Germany (Will he perform tricks on the floor of the Bundestag for his EPP brethren? Other than rolling over I mean.) and the rest of the coalition cabinet occupied with the game of chairs and who gets the next 200K a year European commission post (240K euro PA, default tax is minimal) is it any wonder that things are slipping a little. Why fight for the country’s interests when you can bask in the appreciation of your German masters or fight over the spoils of submission? Yes, in all the debate about the incompetence and malice of European Union officialdom we sometimes lose track that the European political arrangement is not just corrupt but corrupting. @ DOCM McCarthy’s piece is basically the sam old false claims garnished again with some war rhethoric and how Germany is somehow responsible for other peoples decisions and debt. The usual empty threats “or not at all”, like Camerons “or UK will leave the EU”, which begins to sound more like a promise. Nothing new, we had the discussions in this blog often. http://www.ft.com/intl/cms/s/0/9e03a48e-05ef-11e4-89a5-00144feab7de.html?siteedition=intl#axzz35JBWxz00 goes into the same direction. The chuzpe, with which the FT first slandered Juncker, and now tries to rewrite history “Merkel abandoned him”, while the left crazies like Habermas slandered her for talking with her fellow European Council colleaques, who have the right to make the proposal, a whole weekend with Cameron, the dutch and swedish Bildt. The FT article is very good in outline the stop start nature of crisis resolution in the EZ, with the brakes constantly being applied by recalcitrant Germany. If Draghi’s QE initiative ends up in the same dead end then it is all over the European. Germany will have had a good cut at destroying Europe again for the 3rd time in a century. Tull, when I explain people here, that we have to be very careful and not give in one bit on liability, I repeatedly show them your utterings, to convince them, that there is evil in the world. BTW, Germany – Brazil 5:0 after 29 min : – ) Francis, That is a hollow boast on your part. How are you going to enforce liability unless of course you are going to March one of your traditional routes. There ye go again, inflicting unnecessary punishment on a hapless victim. @ francis I posted this on the “structural reform” thread (which has also gone off at a tangent). —- Of interest in this general context, the proposal from the DIW, Berlin. http://www.diw.de/en/diw_01.c.469156.en/topics_news/growing_out_of_the_crisis_diw_berlin_proposes_european_investment_fund.html MEP Brian Hayes in the Sunday Times said had warm words for the approach, commenting in the context of the diminishing prospects for retrospective bank recapitalisation; “We have got to be looking at alternatives that would help Ireland recover fast, but would be, effectively support in lieu of bank recapitalisation or retroactive support”. It was discussed between Merkel and the Taoiseach which suggests that the DIW logic may be gaining round in the general context of reviving economic growth in Europe. —- We will see! Tull, the customers paid for 90 min action, and they got it. At the end we got applause from the brazilian viewers. DOCM, I saw it, I will read it and comment, but not tonight. I hope you understand. In general, if people have specific ideas how to generate growth, many people in Germany are very open. But, as the commenter spook3 in http://www.ft.com/intl/cms/s/0/9e03a48e-05ef-11e4-89a5-00144feab7de.html#axzz35JBWxz00 points out, all that talk of investments and new leaders and blah, and all to be seen is just to continue overconsuming. Germany : Brazil 7:1, the highest score in half finals in written history, Klose highest scoring ever Teamwork, Discipline, nerves, precision, …. german virtues And now we are in danger to develop hubris and screw up the finale. And I just heard “humility” the second time as being important now. @ francis You haven’t addressed the content of McCarthy’s piece. You have just dismissed it. You can do better than that. And well done to Germany, but not much of a contest for the neutrals. Not much of a sports fan myself but I found this article interesting. Germany consult detailed dossier on opponents Brazil @Tull One of the reasons the Euro/$ exchange rate is so high, with such negative effects on the EZ economy, is because the currency markets don’t believe the authorities will do the needful. And the price of that is likely to be deflation which was never in the script for the BuBa. Paul, I did say “Nothing new, we had the discussions in this blog often.” There is no point to repeat the same thing again and again. Some folks here will get on with their endless racist hate mongering, endless repetition of the same false claims. On occasion, when a new aspect of falsehood comes in, like this orphanides today, I straighten out the facts, one time, but this blog is not my day job, and I am mostly interested in interesting links, like from Philip Lane and DOCM. To read his 36 pages DIW link and think about takes also some time for me, before watching our finale partners now : – ) I believe it will be Krauts vs Oranje, the Feierbiest van Gaal, who also worked at the triple AAA (pokal, leaque, champions leaque) club (Adidas, Allianz, Audi sponsors and part owners) Bayern München) is pretty clever too, and did a lot of intelligence, like exchanging the keeper in the 89th minute, classical blitzkrieg, chapeau : – ) But 538 Nate Silver did voluntarily eat craw today too, …, sooo, watch me in 2 hours : – ) What a contrast to some Krugtron, who was “pretty much right about everything” @Francis Oranje went boom.Interesting final between the default/no default camps. @Elia @DOCM cf. http://www.per.gov.ie/strengthening-civil-service-accountability-and-performance-submissions-received/ In the above link to strengthening civil service accountability-take a look at John Dowds & Allen Morgan’s submission. They make the case that the State is frequently ripped off in property transactions and no one is ever held to account. Read Colm Keena’s 2001 classic “Haughey’s Millions-Chairlie’s Money Trial” Haughey dominated Irish political life from the sixties to the nineties. He had always lived beyond his visible means. From 1969 on, he lived like a prince in Kinsealy,at times on nothing more than a backbench TD’s salary. Colm Keena traces the origins of Haughey’s lifestyle back to the 1950′s and to his early life as a partner in Haughey Boland & Co. He follows his early developing relationship relationship Des Traynor and his developing relationships with property developers. In this vital book you will discover why Ireland had the greatest commercial property bubble in the history of mankind. Most of Haughey’s bagmen are sovereign landlords. It made them wealthy beyond their wildest dreams and it copper fastened the most draconian commercial property lease law in the world on all Irish commercial tenants. During the credit bubble years,reckless Irish banks lent billions against these feudal leases,not against the properties themselves and created the greatest commercial property bubble in the history of mankind. Francis Germany v Argentina You must be conflicted..the fatherland v the destination of waves of emigration. @ Francis “I straighten out the facts, one time” Did you ever think of entering the European Modesty Championships? you’d give Louis van Gaal a run for his money. @ DOCM ‘This seems entirely logical. Especially as Ireland can now borrow money at a lower cost than countries that would be contributing to any retrospective re-capitalisation of Irish banks.’ It is logical in a partial, limited way, as the US was ‘logical’ when it set about ‘installing democracy and western values’ in Iraq. Absolutely nothing to do with oil securing oil supplies or selling weapons systems . It is obvious that Irish state borrowing costs have been grossly manipulated by Draghi via OMT, which has the effect of guaranteeing bondholders against loss. They are bogus. That is not obvious because major central banks are printing madly, leading to greater and greater instability in international finance and ultimately the global real economy. Building bigger debt pyramids is effectively a secular religion in the corridors of power, but the real question is cui bono ? McCarthy is right on many points, IMHO, and it has nothing to do with racism. Absent debt forgiveness, the fatal link between sovereigns and banks cannot be broken, and Germany needs to fulfil its responsibilities, in keeping with its massive economic power. Sectoral balance theory demonstrates, at least to my amateur understanding, that private and public sectors cannot deleverage simultaneously. ‘Economist Richard Koo described similar effects for several of the developed world economies in December 2011: “Today private sectors in the U.S., the U.K., Spain, and Ireland (but not Greece) are undergoing massive deleveraging [paying down debt rather than spending] in spite of record low interest rates. This means these countries are all in serious balance sheet recessions. The private sectors in Japan and Germany are not borrowing, either. With borrowers disappearing and banks reluctant to lend, it is no wonder that, after nearly three years of record low interest rates and massive liquidity injections, industrial economies are still doing so poorly. Flow of funds data for the U.S. show a massive shift away from borrowing to savings by the private sector since the housing bubble burst in 2007. The shift for the private sector as a whole represents over 9 percent of U.S. GDP at a time of zero interest rates. Moreover, this increase in private sector savings exceeds the increase in government borrowings (5.8 percent of GDP), which suggests that the government is not doing enough to offset private sector deleveraging.’ http://en.wikipedia.org/wiki/Sectoral_financial_balances Mr Hayes is a clever fellow, but there are no political gains to be made from acknowledging that the euro is a house of cards. He is off now to greener pastures and good luck to him. We had a brief era of stable majority government, but the troika is gone and the next election is not far off. Let us see how the full-time jobs market evolves, and how the electorate take to the ‘sensible’ advice which is on offer from the commanding heights. @ PQ I should have inserted the adverb “politically” prior to “logical”. The issue of retrospective recapitalisation is now getting media coverage again and MEP Hayes has evidently no intention of allowing himself to be outflanked by MEP Flanagan. http://www.irishtimes.com/business/economy/german-boost-for-irish-hopes-of-retroactive-bank-recapitalisation-1.1860969 It confirms me in my conviction that the media and commentariat in Ireland in general has the memory span of a gnat. The details of the agreement have been sitting in a Q & A on the ESM website for months. http://www.esm.europa.eu/pdf/FAQPreliminaryDRIJune2014.pdf Comment 100 No comment! Comments are closed.