‘Dr Doom’ says Ireland is going in the right direction

Nouriel Roubini interview on RTE Radio.

Some highlights, he is more optimistic about Ireland because

1. The fiscal adjustment has been done in more credible way, sooner than in Greece, Spain & Portugal
2. Ireland is more flexible, dynamic, entreprenuerial and has suffered less of a loss of competitiveness than the other PIIGS
3. There is light at the end of the tunnel for Ireland

He thinks it’s not going to be easy, but relative to other members of the Eurozone Ireland could end up doing better over time. He thinks that some countries may leave the Eurozone, reading between the lines, probably not Ireland.

, ,

  • Alias

    Well, I support any dynamic that shrinks the state but the purpose of doing that is always to leave more of the wealth in the hands of those who created it (so that they can create more of it) rather than to have it confiscated and squandered by the state.

    However, that is not why the present dynamic to cut public services is in play. That is in play simply to ensure that taxes collected by the state are diverted from public services for the people who paid those taxes and redirected into foreign banks in the eurosystem whose debts have been nationalised by the state.

    So it is not aimed at growing the economy by shrinking the state but rather it is aimed but at shrinking the economy by extracting wealth and resources from it. It is basically a form of economic colonisation wherein the regime is indigenous but acting in foreign and not national interests.

    Dr Doom might think it a good thing to cut public spending but only does so without understanding why the spending is actually being cut – that it is being done to divert wealth from the entrepreneurs in the form of taxes into foreign banks in foreign states in the form of nationalised debt repayment and it is not being done to leave that wealth in the creative hands of those who created it.

  • Itwas SammyMcNally whatdoneit

    Mack,

    any idea how many people are on the waiting list for houses and if any discussions have taken place with a view to them occupying some of the thousands of empty houses owned by Nama?

  • Greenflag

    ‘but the purpose of doing that is always to leave more of the wealth in the hands of those who created it’

    What was created was waste paper not wealth . And that waste paper was created in Wall St and the City of London by the hedge fund gangsters and sub prime selling financial institutions/con artists who were allowed to get away with their criminal conduct because the elected politicians had packing material in their heads instead of brains 🙁

  • Greenflag

    addend

    waste paper in the form of debt 🙁

  • Free State Barsteward

    Sammy,

    I think the last figure was 80,000.

    As for NAMA offering these people housing in the Ghost Estates now peppered across the country, I wouldn’t hold my breath.

  • Mack

    Maybe not from Nama specifically but councils have been doing deals with developers to purchase units for social housing (often to the shock / chagrin of owner occupiers within the development I imagine).

    It’s unlikely that many on the housing waiting lists want to live in a midlands ghost estate.

  • Free State Barsteward

    Mack,

    As part of the housing boom, a percenatge of all housing built was to be designated for social housing.

    However, during the Celtic Tiger era, there was less of a demand on the waiting lists and thus many councils took money in lieu of social housing.

    As for the ghost estates, I know of many instances where one person has a 300,000 Euro mortgage and next door they pay 50 euro a week to council. Many on the list currently paying private landlords would only be too glad to pay the latter in my opinion.

  • Itwas SammyMcNally whatdoneit

    Free State Barsteward,

    80,000 is quite a few – I wonder how many houses are in Nama. House prices are probably still too high and I suppose the reason such an initiative would not be agreed to is because of the fear of house prices falling further. Cheaper housing may lead to negative equity but it surely brings many economic benefits and is going to happen anyway and it would be nice to think that we are trying to think our way out of the current mess rather than closing our eyes and just praying that it will be all right.

  • Mrazik

    They probably haven’t reached the level of the typical rural house builder yet: too busy dealing with the big boys with over E1 billion owed and still have to work thier way down.

    See here: http://irelandafternama.wordpress.com/2010/04/27/negative-equity-nears-50-percent/

    And here: http://irelandafternama.wordpress.com/2010/04/26/unsold-houses-could-bankrupt-councils/

    As for the future of the ‘Ghost Estates’: http://irelandafternama.wordpress.com/2009/12/05/ghost-estates-‘it-happened-in-the-us-it-could-happen-here’/

  • Itwas SammyMcNally whatdoneit

    Mrazik,

    Just read those links – Holy feck.

  • Itwas SammyMcNally whatdoneit

    If the housing market were allowed to find its own level, I suspect pices would fall to close to pre-boom times – a fall of about 80-90%?

  • Mack

    I think the 20% rule is to prevent sink estates – a repeat of Ballymun and the like. As such it’s a cost imposed on developers and owner occupiers. If the developer buys the council out, he can recoup the cost via higher house prices. Alternatively, the owner occupier in anticipation of their being no social housing in a development will pay more, or if they know there will be some, less. But what you have now, is councils purchasing prime properties in bulk in struggling developments. So either developments that would have been marketed and priced as having no social housing now have a significant element – or if they were to have the 20% owner occupiers may find the ratio is significantly higher.

    There are specific examples on the property pin.

    Many on the list currently paying private landlords would only be too glad to pay the latter in my opinion

    If they can afford to pay rent to private landlords there’s no way in hell they should be subsidised by other taxpayers!

  • Free State Barsteward

    It is hard to know if any of these houses are in NAMA currently but I woud guess quite a few are. Local rural builders may have provided the labour but finance was provided by the bigger construction firms who are in the NAMA queue.

    The fact is banks prefer a dwelling to be left vacant until sold rather than enter in rental agreements or be a landlord to social tenants. One would hope that NAMA has a softer heart and can think a bit outside the box.

  • Mack

    There were also significant rises in salaries during that period. Taxes at the lower end (thanks to tax credits and widening of the bands) are also much lower. But over supply could push prices much lower than were they should settle based on wages. So you could well be right.

  • Mack

    Which, in fairness, this time only perhaps, completely misinterprets Alias’ point!

    He’s talking about the wealth creators of ‘Main Street’ being enslaved by the rentiers of ‘Wall Street’ (Berlin)..

  • Free State Barsteward

    Mack,

    I agree in principle. But there are many people who are the list and while waiting for whatever reason, the only option for them is private rental. So most of their disposable income goes towards rent. Ironically, much the same as those who have large mortgages.

  • Itwas SammyMcNally whatdoneit

    Mack,

    personally I would like to see a government of National unity with FF, FG, Labour and perhaps SF and Greens but I wonder why there has not been public demonstrations to throw the current government out of office?

    The Plain People of Ireland have displayed much (perhaps commendable) patience.

  • Mack

    Are we talking affordable housing or social housing here?

    I wouldn’t have thought social housing was available to workers earning enough to pay rent on a house? And if it was – surely they’d also be entitled to rental supplement?

  • Mack

    The country made huge strides in a very short period of time. Most of those gains haven’t been lost. Most people still have a job, most people still earn a good income. Most people have a pretty good idea that cuts and tax rises had to come.

    That said there were demos. I don’t think Cathal Furey got many at his first one. Then Right To Work have had two the last couple of Tuesdays. They’re marching again next week. I can’t see them getting anywhere after the violence. Despite some high profile media idiocy (useful idiocy perhaps?) Ireland is not Greece (and that’s a good thing) and shouldn’t be like Greece. Despite the rhetoric and high profile incidents – Ireland is not inherently corrupt. People pay their taxes here. And it looks like we’re reasonably tolerant of mistakes (also a good thing).

    That said FF will lose the next election. If they succeed in saving the country they won’t be wiped out and they can use that as a base to rebuild.

  • Itwas SammyMcNally whatdoneit

    Mack,

    The ‘Right to Work’ is a nice idea how about the right to be rich and happy as well, coupled with the Right to pretend everything is just fine and dandy.

    Not sure about people paying thier taxes but it would be nice to see the Plain Poeple of Ireland demanding peacefully there there be an election.

  • Tochais Síoraí

    One of the reasons the plain people of Ireland are not on the streets is that in their heart of hearts they know they were stupid as well. No-one put a gun to anyone’s head to buy a €350k semi d in a nondescript estate in ‘commuter belt’ Westmeath or a €200k section 23 second home in Leitrim. No-one dragged them them onto a plane to Bulgaria to listen to a slick presentation and then buy an apartment off the plans with the 2 years guaranteed rent scam. No-one forced them to put Fianna Fáil in four successive governments even though FF were cheerleading the false boom. Anyone who tried to shout stop was shouted down themselves as a doom laden naysayer. The gobshiotes who were in charge led the chorus but the mob was right behind them.

    The elephant in the Irish room was the lack of responsibility in our society as a whole and deep down, we know it.

  • Tochais Síoraí

    That of course should read ‘gobshites who were in charge’.

  • sammaguire

    If I paid E350k for a house in Westmeath 5 years ago that’s my own tough sh*t. It’s no different than buying shares at the wrong time. Easy to blame the politicians.

  • Itwas SammyMcNally whatdoneit

    Tochais Síoraí,

    I totally agree with the culpability of the Plain People themselves but that does not mean they should not be angry with the government who actullay have the job of running the country. As I have said on Slugger many times before, FG had feck all to say when the foot was down full on the accelerator except enjoy the ride and that is why a government of National unity would be the best option for the country.

    The Plain People should march and demand an election and ensure that we have a proper debate about the way forward rather than have the present incumbents worrying about how their policies may effect their fate at the next election.

  • Mack

    Richard Bruton did make some sort of belated attempt in Dec 2006.

    http://www.politics.ie/economy/129705-cowens-speech-alternative-view.html

    The Government is increasing spending at a rate 50% faster than the growth of national income. Taxes are rising as a result. This year, the Government is continuing the trend by budgeting to increase spending by 11.5%. To put this in perspective, an ordinary worker will be lucky to obtain an increase of 4%. The surplus has been cut back at a time when the economy is experiencing pressure on the prices front and when SSIAs are coming on stream. Spending is increasing far faster than national income and tax revenues and this is posing a threat…
    The Government has doubled its dependence on the construction sector to support its revenue. A total of 25% of every tax euro spent by the Government comes from the construction sector. We are not in a strong position; we are, in fact, in a vulnerable position.
    The real question is whether the Government has done enough to build the capability of the economy to withstand the real pressures under which it is about to come. Those pressures do not merely revolve around the possible slowdown in the housing market; they relate to the relentless march of competition that is coming our way. Our competitiveness has declined in each of the past five years. In the same period, our share of export markets and the level of manufacturing employment have fallen. Some 50% of the jobs that existed in IDA Ireland and Enterprise Ireland industries five years ago have disappeared.