2006 - Central Bank hid property crash forecast

[Pyramid5]

THE Central Bank buried sensational data forecasting a crash in the property market months before the housing market began to crumble in early 2007.

Last week’s report into the banking crisis by Central Bank boss Professor Patrick Honohan revealed that minutes from the bank’s financial stability group had shown that predictions of a crash in the market were deliberately left out of a crucial report in 2006.
…
"After 2002, the chart shows a divergence between predicted and actual prices, with actual house prices being higher than that predicted by the model.
…
A spokesman for the bank declined to release minutes of the meeting where the extraordinary report was excluded from the main review document and declined to make any further comment. The Honohan report also found the bank probably watered down the language of its financial stability reports, fearing adverse market or government reaction.

The complete failure to attach major significance to this report was highlighted by Brian Cowen’s 2007 Budget, announced in December 2006. Buoyed by the appearance of the highest ever Budget surplus, the Fianna Fail-led government announced an extraordinary pre-election Budget giveaway.

Mr Cowen, the then Finance Minister, failed to immediately curb the various tax incentives that were fuelling the runaway property market and he increased mortgage interest reliefs for home buyers.

The Budget also included certain tax exemptions for the construction of nursing homes, creches and registered nursing homes.

independent.ie/business/irish/central-bank-hid-property-crash-forecast-2218968.html

[tea_drinker]

I remember quite a few warnings from them, in fairness. I vaguely recall them being told to get back in their box, not sure was that BOI or a politician.

Though given the scale of the problem and their remit, we should have expected more.
an excerpt from wiki

The OECD and certain senior Irish officials of the Central Bank and Financial Services Authority of Ireland agreed in November 2005 that Irish Property is overvalued by 15%. However this was only released to the public by The Irish Times shortly afterwards[11]. The Central Bank denied that they had deliberately withheld this information to avoid triggering a crash, and in April 2006 said the housing boom may be “unsustainable” and poses a “significant risk” to the economy.

en.wikipedia.org/wiki/Irish_property_bubble

[Calina]

The tragic part is 2006 was far too late. the warnings in I think 2001 should have been acted on. My view is the FR is the bigger problem though because the loosening of lending criteria on the residential side was a huge problem.

[BoyRacer]

Back in 2006 this is what they reported and what was spun in the media

rte.ie/news/2006/1108/housing.html

The Central Bank has published its financial stability report for 2006, which includes a warning about house prices.
The report estimates that house prices are overvalued by 14%.
It also says that the risks and vulnerabilities in the financial system have increased.
**The report also finds that household indebtedness is continuing to soar and will reach 150% of household disposable income by the end of this year.
However, the report concludes that the Irish financial system is in a position to cope with any emerging issues or challenges.
**

Anyone who read the report also saw they reported a 73% overvaluation? why was no credence given to the higher over valuation?

https://img360.imageshack.us/img360/8725/stabilityqx1.jpg

So yes they did hide the results of the analysis that went around the 73% overvaluation.

[Pyramid5]

@Calina

The tragic part is 2006 was far too late. the warnings in I think 2001 should have been acted on. My view is the FR is the bigger problem though because the loosening of lending criteria on the residential side was a huge problem.

How many purchased in late 2006/07

Who was pulling the strings at both the Central Bank and the Regulator, There were weak soundings from both on the Risks. Who silenced them, It is critical that the minutes of that meeting be released.

[Mark_Coughlan]

@tea drinker

I remember quite a few warnings from them, in fairness. I vaguely recall them being told to get back in their box, not sure was that BOI or a politician.

Bertie, via Sean Fleming TD, told them to take a jump. I used a relevant clip in the video below. In it - a clip from Prime Time - Sean Fleming said Bertie was right to ignore the warnings from the CB . It was June '06 if memory serves…

You hear Keelin Shanley asking Fleming about the warning, then Fleming’s response moments later. See video.

Namaland - A walkabout

[What_Goes_Up]

@Mark_Coughlan

Bertie, via Sean Fleming TD, told them to take a jump. I used a relevant clip in the video below where Sean Fleming said Bertie was right to ignore the warnings from the CB on Prime Time. It was June '06 if memory serves…

You hear Keelin Shanley asking Fleming about the warning, then Fleming’s response moments later. See video.

…

Excellent montage.

Financial and political journalists in this country are a bunch of gobshites for the way they treated their “betters” during the bubble.

[jrar42]

@What Goes Up...

@Mark_Coughlan

Bertie, via Sean Fleming TD, told them to take a jump. I used a relevant clip in the video below where Sean Fleming said Bertie was right to ignore the warnings from the CB on Prime Time. It was June '06 if memory serves…

You hear Keelin Shanley asking Fleming about the warning, then Fleming’s response moments later. See video.

…

Excellent montage.

Financial and political journalists in this country are a bunch of gobshites for the way they treated their “betters” during the bubble.

+1

(everytime I hear that Bertie suicide quote, I have this desire to swing a well-aimed steel toe-capped boot into his town halls - scumbag !..as for those who guffaw and indeed start to applaud his pathetic quip, bad cess to them - may they die screaming)