What about us…

Without getting too technical and ignoring the folks on the hill for now, what are the economic senarios for Northern Ireland over the coming months and years?

We all know things are 99% beyond our control at present, wedged between the UK and Euro Zone which is the bigger risk to us?  if one falls will the other follow?

If (or as many think When) Ireland defaults, will the domino effect hit NI harder than elsewhere? or can we piggy back it on the UK as usual?

What are the implications for ROI own resources, such as NAMA property, the NIE grid and cross-border industries?

Finally is there any way of NI taking advantage of the situation?

I’m no expert on any of these issues and would like to hear other viewpoints, to date I follow the BBC and Politics.ie to try to keep some track of events, but sometimes it seems they are reporting entirely different stories, so I would like to invite the Sluggerites to fill in the gap somehow!

  • DT123

    Listening to the grasping at straws about house prices this morning,

    http://www.belfasttelegraph.co.uk/news/local-national/northern-ireland/university-of-ulsters-northern-ireland-house-price-survey-reveals-rising-sales-and-falling-prices-16032711.html

    I was trying to work out why anyone thinks that they could possibly rise in the forseeable future.The cuts in the public sector have not even begun,people are needing larger and larger deposits to even get on the ladder and all this whilst interest rates have been at their lowest in living memory.

    If the average price is still £138k,I’d say they have a long way to fall yet.

  • CharlieMcCarthy29

    They were always going to fall. Once first time buyers, usually young folk, can’t get on the ladder, the whole market eventually slows to a halt or reverses. pity about those who, through fear, were loomed into the inflated market.

  • lamhdearg

    i have lots of tined food in my larder.

  • Frankly Im just glad that I am nearer the end of my life than the start of my life.
    I dont feel any sense of Optimism that in my life time things will get any better. “We” have managed to turn round the upward curve after WW2.
    Our children will be worse off in every field…..education, health, retirement homes, housing, jobs, “rights” etc.
    And frankly thats shameful.

    I am no expert on Economics…..and as events over the last five years have shown …not even the “experts” are “experts”.
    But surely only a fool could not have seen that Housing was a bubble waiting to burst.
    The bizarre thing is that my children who earn as much as I ever did could not afford to buy the house they were brought up in.

    In 1993….this house cost £X k
    At the rates re-valuation circa six years ago it was “valued” at £4X k.
    A fourfold increase in a decade which would not have matched our salaries in 1993. We could not have affordeda similar house.
    It makes no sense.

    Nine years ago, my newly married and almost graduate son was trying to get on the ladder where terraced houses were rising by £1,000 per month and I was telling him these are bound to come down.

    Just five years ago look at the prices of ex NIHE properties in say Gilnahirk or Twinbrook. Did they make ANY kinda sense.
    As has been observed before take young first time buyers out of the market and the whole thing grinds to a halt and our children must limit their aspirations in houses that are rented rather than the upward aspiration my generation had.

    But if someone loses money…..it has gone somewhere.
    It hasnt disappeared.
    Someone else has MADE money.
    A lot of money.
    Im not exactly a revolutionary but it seems to me that the peasants are in revolt.
    This is not a “natural state of affairs”. This is not Uganda. There is no famine.
    And no Government it seems.
    The notion of Yoorp……either as a two tier economic zone or a political entity ….is meaningless.
    The Irish, Greek or Portuguese governments are powerless.
    And so is every other government.
    And Yoorp..the political entit has obviously failed.

    The Yoorpeen politicians are in the hands of the Market. And we have to ask who exactly is The Market.?
    No doubt socialists of the “as soon as this pub closes” type see this as the fal of Capitalism……and all that. But there clearly is something rotten and it seems that ordinary peoples lives are being disrupted…….and Fear is the dominant factor.
    And i really wonder how it will end.
    A Yoorpeen War.
    Personally Id welcome Default in all economies.
    The Slate needs to be wiped clean. The Social Cost will be just too high.

    A few years ago I had major surgery and was recovering at home….worried about my job and mortgage and a youngish family.
    And I heard Dr Phil say on the Oprah Show……
    that
    “eventually we outlive our fears”.
    And its true. Im not worried about how kids are doing at school, the mortgage, the job……but worry for them and the Future.
    But thank Christ I wont be around to see it.

    And this is the thing…..we have lived (especially here) thru dark days but theresa swing of the pendulum to everything. We knew that generally speaking things got better.
    And when we reach the point that we know that this is as good as it gets….then thats a very depressing thought.
    Less so when you realise that theres at most 15 or 20 years left.
    But for those with 40 50 years to look forward (?) to…….frankly I pity you. Because your lives will…..as a general rule…..be less rewarding than your parents lives.

  • lamhdearg

    but better than our grandparents. good post F.J.H.

  • Drumlins Rock

    FJH, i’m not so pessimistic, we shouldn’t be so surprised at what is happening at the minute, why fool our selves and think the lat few years were “rescue packages” when the reality is they were “salvage operations” and we knew that all along. The time seems to be have arrived when the dominoes will start to fall, how many crash is hard to say, It will take a few more years but things will work through and then the cycle begins again, a few false starts etc but that’s life. Big picture wise what happens when the Chinese property bubble bursts (it will I’m sure of that) it could take it on the chin possibly but there is going to be repercussion.
    As for our own bubble, NI isn’t in that bad a situation, the boom was insane but actually short lived with only a small proportion of the population trapped at the top rates, some of them can easily afford to keep going as things were, others will struggle through and others will hand in the keys, old supply and demand obviously comes into it, and on that front we are under supplied at present, if it was a normal market.
    I don’t think it will take 20 or 30 years to sort out, but the next decade shall be interesting times!

  • Drumlins Rock,
    To some extent Life is fueled by Optimism. And I think that depends a lot on Age. In 1990 when, Liverpool FC (boooooo) raked up their 18th English title and manchester United (hooray) where stuck on just 8……it was always at least possible for a 38 year old fan to say that maybe just maybe in his lifetime he would see United go ahead again…
    Likewise Politics in the aerly 1980s it was pssible for a paid up leftie like me to say the Thatcher/Reagan years will pass…..Labour and Democrats will be back.

    And indeed always likely that I would see the end of our squalid little conflict.
    But for a 59 year old, that changes. Not in my Lifetime.
    I will not actually see better times. And even stability will be a different kinda stability than the kind in which Im comfortable.
    Western Europe (and that includes the Britain you love or the Ireland I love………as both our visions include this little shared “fantasy”) will be different.
    Possibly more “conservative”
    Possibly more socialist.
    But away from the mixed economy/politics which I suspect both you and I like.

    As a 5 year old I shareda classroom with FIFTY FOUR others in Primary One.
    But everything that I thought was an upward gradual curve away from that has really turned out to be an arc. We have reached a peak and are moving backwards.

    We have nursing and teaching vacancies but cant afford to pay the nurses, teachers.
    Not to mention we must lower expectations in all fields.
    I have never been a big fan of Yoorp. I voted NO in 1975 and have watched resigned way as national sovreignty was handed over to politicians in Brussels.
    But alas, being overtly anti-Yorrpeen was perceived as being a lunatic……only really supported by SF in the Republic or wide eyed Tory zealots at Westminster.
    Its a bitter irony that the pinnacle of Yoorpeen integration was a fanfare in of all places Dublin.

    But actually I was much more wrong that I thought. The sovreignty sold to Yoorps politicians was actually sold onward to Bankers.
    The Greeks for example cant govern…..not because of Yoorp but because Yoorp is owned by the Banks.
    Thats the challenge for either Yoorpeen governments or “national” governments.
    Who is actually more important……..our citizens or our shareholders.
    I was out late last night. Came home around midnight to watch a football match Id taped.
    Hull City versus Blackpool.
    Tigers and Tangerines.
    Major fishing port against a seaside town. Yorkshire/Lancashire.
    But I noticed something.
    Hull City sponsored by Cash Converters.
    Blackpool by Wonga.

    Two clubs unashamed to be backed by a chain of pawn shops and a pay day loan company.
    And to think that traditionalists like me had a problem with Sharp, JVC & Carlsberg.
    Back to the Future.
    Ironically there was a pawn shop near that primary school in 1957.
    And I thought Id lived long enough to see the last Belfast pawn shop disappear (early 1970s I think a news item…Newtownards Road I think).

    So roll on fifty five kids in a classroom.
    I posteda piece around 2am last night…between the football and a cup of tea watching BBC News.
    Nice Banker man was just saying the same thing that I had posted on Slugger. That we must learn to limit our expectations……housing, health, education.
    So roll on the classroom with 55 kids …again.

    Yet a conspiracy theorist might say there was a certain amount of social engineering here. That the late 20th Century saw the Rise of the Working Class. And the 21st Century saw its Fall.
    So who exactly benefits?
    Not only did we betray our children.
    We managed to betray our parents.
    Shameful.

  • Drumlins Rock

    I went to a school with 26 kids in the class room, that was the entire school! and its still going.

    I’ve been pretty screwed by the slump this time, and am sure worse is to come, but it hasn’t stressed me too much to date and I think there is still enough slack in the system to take a bit more pain yet, guess its just a matter of how far things fall.

    All that has changed is not necessarily bad, even the Wonga sponsorship shows how the hideous over commercialization of sport is at its peak, a lot of high street names are disappearing, great, leaves room for new independents, who are more flexible in these times. I’m not stocking the larder just yet.

  • Reader

    fitzjameshorse1745: But if someone loses money…..it has gone somewhere.
    It hasnt disappeared.
    Someone else has MADE money.
    A lot of money.

    Mostly, the money never came, and so it never went. In 2007 my house was valued at 5 times the price when I bought it in 1989. I didn’t sell it, as I still live here. Now it’s maybe worth 3.5 times the 1989 price. I hadn’t made a packet in 2007, and I haven’t lost a packet since. I still live in the house I bought then. If I sell it, I still need somewhere to live.
    My children will benefit from the value of my house when I die, but really it’s in their interest if the price of that (1) house falls, as they will have to get 4 houses to live in.
    The so called boom hurt more people than it helped, especially those fools who released equity, and those who couldn’t get onto the housing ladder. As for those who bought houses for reasons other than to live in – some profited (a lot) and some got badly burned. There are people being burned with negative equity, others who got out in time. There isn’t a moral difference between winners and losers. Just some luck, some caution, some alertness.
    But most of the ‘winners’ aren’t sitting on piles of cash either. The money has been spent on imported consumer goods. That’s the real reason why we are up the creek.

  • The only good reason to buy a house is to live somewhere.
    Those who bought to let were often fuelled by Greed.
    If a lot have lost out, I cant bring myself to feel sorry for them.

  • Alias

    The problem with using a commodity as a reserve currency is that the price of the commodity increases when the total supply of money exheeds the total value of the commodity. For example, there is now more money in circulation than there is gold to that value, so a return to the gold standard would lead to a sharp spike in the price of gold. Plus, of course, the oil like gold would have to be extracted and stored to have value so the cost of your oil would skyrocket, and global economic collapse would be assured. Some on the right advocate using a basket of commodities but a hybrid system that used a leveraged gold standard with a ratio of ten ( to allow for fiat money) would work if an international law underpinned it.

  • Alias

    Err, sorry, wrong thread for that post…

  • Pigeon Toes

    FJH. What about those “reluctant landlords”

  • Boglover

    Surely the money aspects are only a symptom (however painful) of the deeper malaise, which is that we (i.e. humanity) are consuming resources at an unsustainable rate? Be it oil, water, phosphorus (see http://www.thebrokeronline.eu/en/Articles/Peak-phosphorus) or whatever commodity you choose, there is a limit to the amount available. The current economic model, which requires continued “growth”, actually means continued consumption of resources which will eventually run out, despite clever technology making them last longer.
    We’re entering “interesting times” (an appropriate expression, give it’s Chinese origin!) and tinkering with the current financial system by wizard wheezes such as quantitative easing and the like aren’t going get us out of the hole.

  • Kevin Barry

    FJH, very interesting posts.

    I was being interviewed by the Dean for an MBA course a few months ago in Moscow, focusing specifically on developing markets and we got on to the topic of what challenges eastern economies will face compared to their western counterparts over the coming years.

    As he rolled his eyes, it was his opinion that in places like China they face problems that are good to have, where a lot of people will be winners if or when they’re solved, while in developed economies we face a lot of problems where no one will be happy and it will radically change our lives, probably for the worse.

    I share a lot of his opinions, but at the same time, i can see things turning for the better. I just feel that the dithering shown by European leaders not facing up to the problems of a failed banking model, not having the requisite oversight and measures in place to cool periphery economies when borrowing costs were set low to stimulate growth in Germany (to our disadvantage) and finally not taking quick, radical action to sort out the sovereign debt crises and calm the markets has helped create (excuse my language) a shit storm of biblical proportions.

    I would recommend you go in YouTube and check out Hugh Hendry who has been saying that the previous ‘solutions’ for Greece would not succeed for near 18 months now.

    Finally DR, re China and it’s property bubble, I couldn’t agree more with you. Skyscrapers costing $800m a piece and left empty for months on end only spells trouble. On a wider point my friend lives in Novosibirsk and she bought her new apartment off plan for $40k and flipped it before she moved in one year later for $60k which is perfectly normal in Russia.