Austin whatever was on today saying the Government had one last chance to salvage the economy before it goes proper tits up, together with some great spinning that Consumer sentiment was up (but only to its second worst point ever).
AIB also got in on the act today reducing rates.
This week and next the VI’s are going to be very dizzy spinning one last yarn, as with the nights closing in it looks like the lights are going out on the Irish economic ‘miracle’ come ponzi scheme and it looks like they will not be relit for quite some time.
Will the VI’s save the day in the next week or two, or have the great masses finally copped on that you cannot build an economy on a property bubble?
IMHO the real nightmare will begin at the start of 2009. We employ directly and indirectly around 40 people in construction services to builders, government and private sector. We are living off contracts some of which were signed up to 2 years ago. Enquiries for new contracts dried up around the beginning of this year, even those that are coming in are not worth doing as they are tendering at well below cost. We are in business over 20 years and have never laid off staff. We would anticipate laying off aproximately 30 people by year end. There is nothing coming through into the pipeline for 2009. We would normally be pricing/tendering for next years work around 6-9 months in advance, the enquiries are not there. Many others i talk to in similar businesses have already laid off staff or are in the same position - many of them admit to already losing money in their day to day trading. Builders/developers are not paying their bills, government bodies were always slow to pay but are now looking for any excuse to delay payment.
There have been quite a few predicted “black Fridays” so far that never materialised. At this stage, I think we won’t be seeing any either. It’s just going to continue at the current pace with the odd flurry but a constant drip drip effect, i.e. we’re going Japanese. And that’s the real nightmare.
That may well be so Gaius, but there are certain things that are for sure happening:
The inventory for sale AND for rent continues to rise.
The number and size of price drops continues to increase.
LTV criteria continues to tighten.
The BTL sector is sweating blood, driving down rents - further decreasing the market’s marginal propensity to buy.
Price drops have now definitely entered a feedback loop - why buy now ?
The time on market ‘for sale’ continues to increase.
I don’t think there’ll be a ‘Black Friday’ moment either - but this pressure will ultimately result in a desperation/capitulation stage for forced sellers / executor and divorce sales at the margin.
This will reveal the clearing price - and reset buyer expectations accordingly. Whether that clears the stock or not is immaterial. It will have reset price expectations, and the market will have taken a step down.
It’ll continue this autumn for sure, with developers hands forced on existing new builds - which is where the drops will be most obvious, cascading into the second hand market.
I still expect next spring to be the real tipping point - there’ll be nowhere left to hide. The market is ready for another big slide/step down.
The point being that it may well look Japanese from an inventory point of view because of [Older] sellers still in denial - but ultimately the market will already have moved on and buyers will have their pick of newcomers to volley offers at, leaving the old ostrich merchants to languish indefinitely. It will split the market into two camps - Realistic Seller or Dreamer.
On a daily basis, and in the middle of it, it is often hard to discern shifts. As I come home every 6 - 8 weeks, I see fundamental changes in attitude to the burst and anecdotal evidence of a huge slowdown.
March time - absolute denial. A slowdown was underway, but pretty much business as usual.
Second from last time at home (End of May) murmurings of discontent. Mates (nearly all sparks / plumbers / chippies etc) getting itchy about payments and only finishing projects off. Little or nothing in the pipeline.
Last time, a few weeks ago - carnage. Two mates scratching their proverbials, one on week on / week off, one let go pretty much everyone in his company (roofing). Cousin about to head off to Sweden. No one has any projects bar bits and pieces they never got round to.
You may not be aware of it, and the unemployment figures aren’t showing it (primarily, I guess, because so many construction workers were self employed?) but it is a bloodbath out there on the building sites.
“Black Summer” happened, we just don’t know it yet.
I agree to an extent. However, and as pointed out on the Pin previously, self employed people (whether as a sole trader or as a limited company) have little recourse to social welfare payments and simply disappear from the workforce / unemployment figures. Of my friends, I believe only one works directly - PAYE - for his employer.
A more accurate figure may be “companies” (read one man bands) going into liquidation or closing.
I remember closing my Irish “company” in 2000 or so and it took a while. Anyone on here care to give me a refresher as to the procedure?
Interesting post. My other half just returned from a weekend back in Ireland and she reported a similar experience. In the Dublin suburb where we both grew up a number of local businesses have closed and one of the main local hotels is now only opening for the weekends. People can no longer ignore the large number of empty ‘luxury’ homes that dot the area and it is well know that a number of them are being sold by the banks who are stuck with them after a local developer went to the wall.
The mood has certainly changed as more and more friends and relatives realise that the economy is unlikely to rebound quickly. We are now told that we are better off where we are, which is quite a turnaround as for years no one could understand why we did not move back.
Still it was quite a shock for me when she told me all that she had seen and heard. The effects of the property bust were all too predictable, but it is another thing to see businesses go under and know people who have been laid off.
I closed my “company” in 2003 (last salary drawn in 2002) - took about 3 years before I could persuade SW that I existed, didn’t have a fortune stashed away and wasn’t living with a gaggle of women who were supporting me. So my “un-employment” took 4 years to register! Mind you I’m still listed as a director of the long defunct company, as I am listed as director of 2 others (one is defunct 6 years, and the other I resigned from 15 years ago…) so SW are not the only ones who move slowly. The procedure is simple - bung everything in a drawer and ignore any letters with printed harps on them - eventually they will go away.
as an ex-contractor, who has his own cough company,
(now staff) i can tell you its very difficult to actually get a company closed.
Companies house in ireland is staffed by a bunch of wankers, and i do not use that term lightly.
that particular department of the goverment needs clearing out.
full of useless fuckwits
So, as more and more contractors go bump, the heartbreak those pisspot little Hitlers will cause will be immense.
I could not have it more eloquently myself. Do they still insist on being paid in cash or a “banker’s certified cheque” (my Bank laughed at me - said they hadn’t had such things for donkey’s years)? FFS - why would anyone give the Companies Office a duff cheque? They could just strike you off in a flash if it bounced. About “As much use as a one-legged man at an arse-kicking party” (Denis Thatchers Diary in Private Eye I believe)