IRISH AND INTERNATIONAL HOUSE PRICE INDEX: A COMPARISON
Sep 12th, 2010 by Conor McCabe
This is a quick post, which came out of a conversation I had yesterday after the Desmond Greaves School.
The first graph is the house price index (1987=base year) for the USA, UK, Australia and New Zealand.
The one below shows the house price index (1987=base year) for Ireland.
The pattern is roughly the same because what drove Irish house prices in the end was not some Gaelic-house-purchase DNA, but international finance laundering derivative-induced value via the real economy.
The index in Ireland reaches a higher peak - that’s local factors kicking in - but the overall trend is a global one.
The other local factor is the nature of the source of finance.
Irish banks were heavily reliant on the international credit markets for their finance. When those markets crashed in 2007, it cut Ireland’s ‘miracle’ economy away from its ‘miracle.’
The Irish government then went ahead and guaranteed this ‘miracle’ even though the level of borrowing wasn’t related to the level of value-production in the State.
This was the same across the world: levels of credit and value-production bore little relation to each other.
That is why virtually no other country guaranteed loans. They guaranteed deposits.
The mortgage debt crisis and property crash in the USA which is evident in the first graph, Ireland is going through now.
In other words, the mantra that a property crash in Ireland caused Ireland’s economy to belly-up is not the case.
The property crash is happening now, after the source of funding dried up.
We are experiencing now what the USA experienced three years ago.
The government has no contingency plan for this. In fact, AIB is selling off its profitable arms in order to try to stave off the inevitable.
By doing so, AIB has left itself with little more than an unsustainable mortgage bubble to keep itself afloat.
And with double-income mortgages in a time of double-digit unemployment, and failing businesses and subsequent loan defaults, that bank is going to drown.
AIB is dead. It just doesn’t know it yet.
But, one last plead from myself.
Can the Irish left please stop reading and buying the Irish Times, and watching RTE?
Because the information from both is absolute cack.
Eh, ‘plea’ d’ye mean Conor ??
or maybe ‘plaid’ of the type not worn by dead men / bankers…
Can the Irish left please stop reading and buying the Irish Times, and watching RTE?
Stopped buying the IT years ago, stopped reading it on-line last month. Like an ex-smoker though I do lapse sometimes, but only to feel disgusted afterwards. You’re right though, stop taking the drug and look elsewhere for information, there’s plenty of it out there, and opinion pieces which are more convincing and better constructed, which haven’t been cobbled together aginst a publication deadline by a freelance journalist who’s primary concern is to please their paymasters and continue to receive a stream of commissions.
It may be a bit King James Bible, Ed, but plead is what I mean.
I’m using the Irish Times archive a lot these days, left, and the difference in the paper since Geraldine Kennedy took over really jumps out at me. And I don’t think the Irish Times has actually broken a story since she became editor. It’s all rejigged press releases and associated press or Guardian news service for the international stories.
And I don’t think the Irish Times has actually broken a story since she became editor. It’s all rejigged press releases and associated press or Guardian news service for the international stories.
It would be interesting to know the number of journalists directly employed as reporters then and now. The suspicion being that rationalisation of direct costs (staff) through out-sourcing to freelancers and wire services has depleted the caacity of the IT to perform investigative journalism of its own.
Just as an anecdote, my father worked as a journalist in Independent newspapers, now retired. He recently commented that the remaining staff is tiny, occupying a few desks down in a corner of an office down in Talbot St., a far remove from the old days in Abbey St when they occupied almost that fill block between Arnotts and Easons. Of course the days of vertical integratation of corporations is gone, across all sectors of the economy, out-sourcing is king, and quality suffers as the productivity of the remaining core staff is conticually stretched to breaking point.
“rationalisation of direct costs (staff) through out-sourcing to freelancers and wire services has depleted the caacity of the IT to perform investigative journalism of its own”
That’s true. One of the more irritating aspects of modern journalism’s beal bocht is the argument that free content on the internet has undermined the ability of newspapers to report the news. Well, most news on the internet is just cannibalised from other sources - very little of it is actual investigative journalism or actual informed analysis. Newspapers started going that way years ago, in order to cut costs. If newspapers got out of the cannibalised news and analysis business, and started investigating again, they might have a future. But instead of charging in order to fund the creation of content, they are charging us to read ads, cogged content, and whatever Sarah Carey shits out over the week. They need to be more like HBO and less like ITV.
Funny thing is that the internet, being all things to all people, is one of the few places where you can get informed content and analysis. It’s hard to find, but as you said, it is out there.
Did anybody else look at those graphs and think “how the fuck can the prices be going up again already”?
““how the fuck can the prices be going up again already”
Prelude to the “double-dip” we’re hearing about?
It’s a good question though. It suggests that other economies have banking systems which are continuing to lend. Or else the stats are lying.
The rise in house prices in the economies listed above has been covered in the press. Some examples:
UK
http://news.bbc.co.uk/2/hi/business/8497627.stm
USA
http://www.google.com/hostednews/afp/article/ALeqM5imzcruJnp5WZ7KCFt-lL3sYYdLuw
Australia (where the bubble hasn’t burst yet)
http://www.favstocks.com/australian-lenders-learn-nothing-from-us-housing-bust-mortgage-house-offer-105-mortgages-westpack-offers-97-mortgages/1224491/
New Zealand
http://www.businessweek.com/news/2010-09-08/n-z-house-prices-rise-at-slowest-annual-pace-since-december.html
They’re even going back up again here in France. I have no idea how or why - as unemployment is still going in the other direction.