Thursday, May 08, 2008
“not perfect and not wholly democratic..”
The press conference following the events in Belfast today, live-streamed online at the time, was very interesting viewing. The politicians’ set-pieces are still online here. The BBC’s Mark Devenport picks up on the potential problem with Gordon Brown’s ‘pressie’
The Prime Minister did bring one pressie - telling the Executive they could keep the proceeds from sales of their assets to the tune of £2.2 billion. That’s double the current figure. But is this an enormously generous gesture or an injunction to sell off the family silver at a time when the market price is rock bottom?
Executive sources are sceptical about whether they can get anywhere near the £2.2 billion figure. What was clear from Sir David Varney’s recent report is that Belfast port is the big plum Whitehall believes can be plucked from the Executive’s tree. But Stormont ministers are far from certain this would be such a good idea.
The online clip doesn’t include the journalists’ questions at the end.. nor the moment when, just after Taoiseach Brian Cowen had expressed confidence in a stablity provided for through the Belfast and St Andrews Agreements which bind future governments to the agreed arrangements, NI First Minister Ian Paisley wandered off the feel-good script somewhat. Describing the current administration at Stormont as “not perfect and not wholly democratic, but the best [he] could get for the people of Northern Ireland”, Ian Paisley went on to express a desire to move towards more democratic structures sooner rather than later.. at which point the deputy First Minister intervened and called an end to the press conference citing other engagements for the political couple.
Pete Baker @ 06:36 PM
McGrath, if you want “spill over” from FDI, then look to the country that gets the lion’s share of it: the UK. The UK gets more FDI that China and the US combined. For example, 5,700 U.S. companies have operations in the UK compared to just over 600 in Ireland. FDI created 2.6 million jobs in the UK compared to 150,000 in Ireland – that is significantly less, even allowing for the per capita adjustment, than the UK. Indeed, Irish-owned companies employ more people in the U.S. than US-owned companies employ in Ireland.
“If you are looking to have a low business tax economy you are going down the road of a low wage economy and at the end of the economic cycle many of these businesses will up and leave.” - Mick Hall
Rubbish. Ireland has one of the highest minimum wage rates in the world. It also has a minimum unemployment rate that is almost 3 times higher than the UK rate.
Posted by on May 10, 2008 @ 12:16 AM“Rubbish. Ireland has one of the highest minimum wage rates in the world.”
Dave
Not really sure what point your making beyond being somewhat rude and proving my point that is, or did you mean average wage?
Mcgrath
Here you seem to be caught in a thatcherite time warp, or are you asking for the state to subsidize middle class first time buyers at the expense of those who cannot get on the property ladder due to a very low income, just as Thatcher did,
Most of western Europe does not see home ownership as a priority, nor that desirable. What we need is an adequate supply of first class homes for rent.
You seem to have been caught up in thatcherite thinking, home ownership good all else bad. There is absolutely no reason why public homes should become sink estates, to suggest that they do is simply middle class prejudice.[I’m not saying you said that]
What the rush to buy property has done, is saddle young people with enormous debt, hence they are forced to put off having families, hence the birth rate drops, the tax base suffers and government fill it with overseas newcomers. And you talk of reducing anti-social burdens.
What we need is some joined up thinking and an attempt to change peoples mindset about housing in the UK and Ireland, a home should not be a short term investment but a place to live and prosper in.
The UK property market has been the curse of much of the EU.
Posted by on May 10, 2008 @ 03:23 PMMH:
Here you seem to be caught in a thatcherite time warp, or are you asking for the state to subsidize middle class first time buyers at the expense of those who cannot get on the property ladder due to a very low income, just as Thatcher did,
Most of western Europe does not see home ownership as a priority, nor that desirable. What we need is an adequate supply of first class homes for rent.
I wasn’t focusing on the middle class. I think affordable housing can be created by changes to planning permission rules that would keep the greedy home building industry in check.
Balanced supply, coupled with structured mortgages for first time buyers with rules on speculation would keep pricing reasonable, even for lower incomes.
I’m an advocate for the responsibility and motivation that comes from home ownership. Subsidized rental promotes a vicious cycle that places a burden on the remainder of society, subsidized ownership is a mechanism to lessen that burden over time.
Posted by on May 10, 2008 @ 06:02 PMMcGrath,
‘For one, NI, even the ROI needs to take more advantage of its intellectual capital and build --- were the stakeholders can build and retain equity. We are selling ourselves short by simply being prepared to be the laboring workforce of large overseas organizations.’
I agree . However it’s not all one way traffic . Take CRH (Cement Roadstone Holdings ) Which was established by Tom Roche with 500 pounds in the depressed 1930’s and today employs thousands of people around the world and has sales of 22 billion dollars - almost one third of Northern Ireland’s total annual private sector output.
‘Effective privatization of various government services, eg division of the water service into agencies with boards of trustees. Public bids on contracts for rubbish collection and disposal etc’
I’m as much of a ‘capitalist’ as the next man however what has the above strategy actually achieved in Thatcherite or for that matter post Thatcherite Britain ? Has it improved services or has it merely exchanged paying higher wages (living wages) to public sector laborers to paying ‘minimum ‘ wages to private sector laborers ?
‘Scaling back of public housing construction, refocus on construction of affordable housing for first time owners as so reducing anti-social burdens and reduction of government administration.’
Given the present climate in ‘housing’ generally in the english speaking world the emphasis should be on scaling back the anti social activities of the financial lending sector who have preyed on the weak and sold mortgages to people under circumstances that were less than transparent -Northern Rock etc etc .
But in total what you have put forward makes sense however it’s my contention that it will need a lot more than the above to drag Northern Ireland’s economy up to the level of the average UK region never mind attain any near parity with the Republic’s .
Posted by on May 10, 2008 @ 06:14 PMGF:
Given the present climate in ‘housing’ generally in the english speaking world the emphasis should be on scaling back the anti social activities of the financial lending sector who have preyed on the weak and sold mortgages to people under circumstances that were less than transparent -Northern Rock etc etc .
The reckless lending stemmed in large part from pressure from greedy home builders, that pressure created a false demand by opening up the opportunity for people to buy houses that normally couldn’t afford them. Then the knock on effect was home builders continuously scaled up construction specification.
See my previous post.
Posted by on May 10, 2008 @ 07:19 PMMick Hall,
‘What the rush to buy property has done, is saddle young people with enormous debt, hence they are forced to put off having families, hence the birth rate drops, the tax base suffers and government fill it with overseas newcomers. And you talk of reducing anti-social burdens.’
Good points and to some extent true. Not sure if a correlation between the birth rate and housing debt has been proven . IMO birth rate reduction has been correlated mostly with higher incomes and educational level in the past . Many of the newcomers are prepared to work for wages that the ‘locals’ won’t . This phenomenon is not just prevalent in NI/ROI/UK .
We’re not Scnadinavians or French or Germans in our attitude towards property ownership. In those countries ‘landlords’ are strictly regulated and are fined if they allow their properties to fall below standard. The history of landlordism in Ireland and Britain is replete with terms such as Rachmanism -slumlord - etc etc .
McGrath,
‘Subsidized rental promotes a vicious cycle that places a burden on the remainder of society, subsidized ownership is a mechanism to lessen that burden over time.
One would hope so however today’s market has just blown the bubble on property for some time ahead . I read that in parts of the USA people who have purchased homes two years ago when the market was it’s height are now walking away from their homes and leaving them empty sometimes indeed vandalising the property and removing any fixtures of value . Why pay back a mortgage on a property that cost 250,000 dollars and not only can’t sell for 250,000 or even 200,000 and if offered at 170,000 will be on the market for a year or more and perhaps not sell at all ?
Tough times ahead for the private housing sector . In the meantime people have to be housed and I agree that ‘subsidised’ ownership is probably the way to go however subsidised ‘rentals’ will be necessary for those on the very lowest rungs of the income ladder-unless of course you have no objection to seeing families living on the street? No doubt some of the ultra right wing lunatics would have no problem with that . Neither did their predecessors in the 19th century . I would hope that there has been some advance in our thinking since those times .
Posted by on May 10, 2008 @ 07:48 PMMcGrath,
‘The reckless lending stemmed in large part from pressure from greedy home builders, ‘
I’m not suggesting that home builders are not ‘greedy’ or were not pushing sales as much as they could . But behind the ‘builders’ were the banks and financial lenders who made it far too easy for people to buy. No deposit and no interest loans -balloon payments etc etc . By about 2003 anybody who could afford a mortgage and pay it either had one or did’nt need one. At that point the finance sector realised that the only way to increase their sales was by selling more ‘mortgages’ -The only market left was that section of the population who were barely able to afford the rising house prices . These people were sucked into one of the greatest ‘scams’ ever perpetrated by the financial sector/banks/building socieities/mortgage brokers etc etc on consumers within living memory . The reason the banks/building societies could do this with impunity was due to the deregulation of the banking sector and through the creation of all kinds of innovative investment products that bundled all of these sub prime loans into ‘investment caches’ that were sold at high interest returns to the market .
These people have a lot to answer for as indeed have the western governments who bought into deregulation of the banking sector in the hope that those running the banks and finance companies would somehow be above ‘ripping off’ the punters .
Wrong call on human nature I’m afraid .
Posted by on May 10, 2008 @ 08:01 PMGF:
Of course subsidized renting will always be a necessary and important factor in society, and as such should meet good standards. But modern society it shouldn’t continue to be a necessity or even the first preference of wide segments of society.
In the middle to latter parts of the 20th century, this was the possibly the single biggest improvement in the quality of life for much of Irish society. But this also played a part in NI becoming a public sector driven economy.
Posted by on May 10, 2008 @ 08:09 PMMcGrath,
‘But modern society it shouldn’t continue to be a necessity or even the first preference of wide segments of society.’
Unfortunately it is a necessity and the conditions of modern life in the western world generally have made it even more necessary than probably say 10 years ago . I agree that home ownership will remain the first preference for the widest segment within modern Irish/British society somewhere between 65 and 85% most likely. But for the rest the State must take the responsibility for housing be it through subsidised ownership or rentals imo.
Posted by on May 10, 2008 @ 08:49 PMWrong call on human nature I’m afraid .
Posted by Greenflag on May 10, 2008 @ 08:01 PM
Lending institutions and builders get their feedback from the real estate agent/ realtors to sell houses. It goes along the lines of whats selling, whats not selling, what needs to be built / done to make things sell. About 4 years ago, supply was starting to exceed demand, so the pressure came, mostly from builders who were sitting on inventory, to increase demand. The lending institutions caved in, mostly because because the investment pools they borrow from to fund mortgages were flush with cash, caused by liquidation of equity by homeowners in previous years.
Yes, deregulation of banking fueled a lot of this, but the home building industry has a lot to answer for to, they are there own worst enemy. Instead of scaling back when indicators showed supply was high, they found a way to recklessly continue, then everything evaporated.
If you look back, the home building industry runs itself into the ground once every 10 to 15 years. I follow the property markets in the USA and Australia in detail, its the same story, with the exception that the Australian market seems to have shown some restraint and is still is good shape (comparatively)
I call human nature on it all. Regulation is (was) in place to control human nature.
Posted by on May 10, 2008 @ 08:56 PMMcGrath,
‘In the middle to latter parts of the 20th century, this was the possibly the single biggest improvement in the quality of life for much of Irish society.’
Indeed and on both sides of the border.
‘ But this also played a part in NI becoming a public sector driven economy. ‘
That it did but the reason for this was the huge difference in the economic experience of the North versus the South in the period say 1974 through 2005 . The latter’s economy has tripled or more in that period, and wages , productivity and social welfare benefits have likewise increased . here was huge FDI in the economy as well as dramatic increase in population via immigration etc .
Without that kind of economic experience Northern Ireland’s economy languished and thus more and more people had to be housed under subsidised ‘rental ‘ schemes . The Republic ‘lifted’ itself beyond that level . Had NI experienced the same rate of economic growth as the Republic it would not now be so public sector dependent .
The cure has to be to get the private sector working at it’s maximum before it’s priced out of the economy by an overpaid and extortionate public sector .
Posted by on May 10, 2008 @ 08:58 PMGF:
That it did but the reason for this was the huge difference in the economic experience of the North versus the South in the period say 1974 through 2005 . The latter’s economy has tripled or more in that period, and wages , productivity and social welfare benefits have likewise increased . here was huge FDI in the economy as well as dramatic increase in population via immigration etc.
Which draws into light how pathetic the current NI economic strategy is. Actually, I’m honestly not convinced NI has a economic strategy of any merit. The current strategy seems to be based on a “whats working for the neighbours, must work for us” attitude. Worse still, current economic planning in NI seems to be driven by the egos of a few politicians.
I think we will see in the near future that BIFFO cant debate his way out of the receding economic climate, and G Brown most likely is going to end up in opposition government, if not on the back benches.
When NI’s economic strategy stops be driven by political ego and stops being propped up by new rounds of funding by FDI and entrepreneurship starts to lead the way, there will be serious gains.
Posted by on May 10, 2008 @ 11:04 PM‘I’m honestly not convinced NI has a economic strategy of any merit.’
Neither am I for what it’s worth .
‘ The current strategy seems to be based on a “whats working for the neighbours, must work for us” attitude.’
The Republic /Free State went through the same process 1922 to 1957 and again briefly from 1977 through 1987 . No radical departures of any kind were considered . If policies had’nt first been tried out in the UK then Irish Governments did’nt want to even hear of them .
‘ Which draws into light how pathetic the current NI economic strategy is’
It’s probably the worst timing possible for the new Assembly to be given the reins. Realistically they can’t do a lot economically -they don’t have the powers to do much other than redistribute funds between various departments and interests.
Biffo has til 2012 to make his mark . It won’t be easy but I still believe he’s the best we’ve got . Gordon Brown has a more difficult task and has less time to turn around . He’s less lucky than Biffo in that the Conservatives are at least an opposition that seem capable of winning the next election. What has Biffo to face ? Kenny and Gilmore ? He can wipe both away any day in the Dail with his little finger . The opposition will have to find a ‘heavyweight’ candidate for the alternative Taoiseach position and I don’t see anyone on the horizon at this stage.
Two years is a very long time in politics . Only a year ago Mr Brown was popularity incarnate. He may rise again .
Posted by on May 11, 2008 @ 12:57 AMWhat has not been mentioned here is that state funded social housing in the rest of the UK gives people an opportunity to get on to the property ladder. This now applies not only to council houses but also housing associations.
One of the problems with the developers is they have brought up large tracts of land, often brown field sites, which they sit on, thus making the demand for their product all the greater, as to is the price. For example this has happened in London although the Brown government and Livingstone have attempted to over come this by 50,000 new builds.
The need for social housing in some areas comes not just from people on low incomes, for example a worker in an essential service who is a first time buyer, [health care,education, transport, police etc] would have one hell of a problem buying a home in London.
As to Brown, it hardly matters what he does in the coming year, by and large he is a safe pair of hands politically and in any case the election will be decided on two things, the worlds economy and whether Cameron cocks up.
We should not overlook the fact that the NL spin machine has not been let loose on him yet. I wonder if deep down NL wanted johnson to win London, as unless the tories can keep him out of the UK on a perpetual overseas tour he will undoubtedly muck up and splash Cameron with the back wash.
Posted by on May 11, 2008 @ 09:15 AM
