Did Tayto get his grasp of economics from Peter Ridsdale?
Mar 25th, 2007 by Conor McCabe
Did Tayto Ahern get his grasp of economics from Peter Ridsdale?
Currently lying bottom of the championship, heading for relegation to the third division (I just can’t get used to the new-fangled names), Leeds FC were once one of the top teams in the Premiership.
Under Dave O’Leary, Leeds FC never finished out of the top five, and made it to two European semi-finals. then, after the 2001 season the chairman Peter Ridsdale took a huge risk by borrowing on the back of future earning from European soccer. Once the team failed to qualify for European competition, however, the club found itself unable to repay the loans. It responded by selling players, leading to a very public spat between the manager and chairman and the eventual sacking of O’Leary. Not surprisingly, the selling of key players did not increase the team’s performances, and within two years the club dropped to the championship. Its financial difficulties saw the club sell most of its key players, its training ground, and, eventually, its stadium. It is now on the edge of dropping into the third division for the first time in its 88 year history.
The lesson here is that you risk all by gambling on future earnings. Quelle surprise.
With regard to Tayto Ahern, his case that his massive spending plans are financially viable is based on future non-direct tax earnings. According to the cross-party promises, direct taxation is to be cut regardless of who gets into government.
But Ireland’s non-direct tax income today is over-reliant on the housing market. A downturn in its fortunes will signal a downturn in the government’s fortunes. Added to this, of course, is the subsequent downturn in consumer spending.
It is interesting to note that consumer spending on hardware, paints and goods, dropped by 2.9% for the months October-December 2006, while consumer spending on furniture and soft furnishings in January 2007 is down 19.8% on January 2006.
Less people fixing up houses suggests a more settled housing market, which means that the current house market is over-priced, i.e. demand is not keeping those prices up.
In 2002, Ireland had 1,287,958 dwellings for a population of 3,917,203.
This works out at 3.0 per dwelling. The average house price was €200,000.
Since then 320,149 new dwellings have been built, giving a total of 1,608,107 dwellings for our 2006 census of 4,234,925.
This works out at 2.6 persons per dwelling. The average house price is €311,078 – an increase in price of €111,078 in four years, despite the significant increase in supply.
The figure includes immigrants, the catch-all excuse for the cause of, and solution to, all of Ireland’s problems. A bit like Homer’s beer.
What is keeping house prices up – and boosting the government’s coffers - when on paper demand should have fallen?
Our answer is here, but as regards Tayto and his Leeds FC economics, the central point is that over the next five years we are not going to have the income to spend while cutting tax.
As always, all Tayto has to pull out of the bag is cheese and onion.
Interesting article in the IT on Friday by the head of Threshold who was painting a new dawn of lifelong tenancy agreements. Don’t know if it’s likely, but such an idea would seriously screw aspects of the current housing market…
And housing, on the Northside at least which I’ve been sort of looking at for my own reasons, seems to be stabilising price wise.
An election to lose as Moore McDowell put it?
I’ve been thinking more about the 19% drop in furniture sales in the last year. The price of houses the estate agents have some control over, but the sale of furnture, well, that’s something else. The figures say one thing - people are not buying houses, at least, not in the same numbers as 2005. We know from Primetime that the estate agents are creating artificial buyers to increase bids, and this seems to be borne out by the drop in furniture sales. They cannot keep that up forever, and when it falls, it is going to fall big.
Now that all the horse are out of the gate That Girl summed it all up for us.
“Labour have a clear policy of not going into coalition with Fianna Fail, unless it was in the “National Interest”. Any time most people hear a politician refer to the national interest it makes them want to projectile vomit. If Labour really wanted to serve the national interest, they would disband and in a last glorious statement start a lethal sword fight in the Dail with Fianna Fail ministers.”
Well I liked it.
I think the public are going to stab Fianna Fáil for us. On current trends, we’re looking at a hung parliament, because the anti-government vote is not going to fine Gael and Labour, it’s going to the independents, the Greens, and to a much lesser extent, Sinn Féin.
Fine Gael have to win around 20 more seats in order to make a coalition with them viable. Enda Kenny has to win them 20 seats. highly unlikely, especially as the Greens are on the romp in Dublin. Gas thing is, Richard Bruton could have done it for them in the capital, instead of that bombeem crowd around Kenny, chasing that drunk-driving, knacker-shooting vote.
I’d agree with you Dr. Ben, bar the bit about Richard Bruton. He’s a pleasant enough man in person, but I’ll never quite shake the memory of seeing him speak about the benefits of the free market and privatisation sometime I think in 84 or 85 in a community centre in - I think - Northside beyond Coolock, to a - how shall I put it - unforgiving audience.
Personally brave, sure. Wrong topic, absolutely.
now THAT’S funny! Never knew that.