Indo: Effects of NE could last a decade

From The Irish Independent, 15th June 2010

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](https://www.independent.ie/business/irish/effects-of-negative-equity-crisis-to-be-felt-for-over-a-decade-2220651.html)

On the point of the effect NE will have on workforce mobility, I would point out the good Doctor, that there is significant data that suggest countries which have high rates of home ownership suffer from low workforce mobility, regardless of property prices, and are thus susceptible to systemic higher unemployment when their economies slow down as workers are less able (maybe caused by property prices, length of time to close a sale and/or purchase, or transaction taxes) and/or less inclined (due to emotional reasons) to move.

Countries with higher percentages of the workforce in rented accommodation (and which also have a laws that favour long term rental while protecting, equally, the rights and responsibilities of land lord and tenant) tend to suffer from lower unemployment, fewer unemployment “black spots”/ghettos and recover from down turns faster.

Negative Equity is just one factor that will further worsen the problems of workforce mobility already embedded in the Irish economy by the “born with a brick in the belly” attitude of Irish people having to own their property, made worse by the lack of proper legislation on the rental sector.

NE is not, in and of itself, a direct cause of a lack of mobility, just another factor, high rates of home ownership and associated debt are the problem.

Blue Horseshoe

Consty gets ready to lead the choir…

Now, compared to the argument that McWilliams gets a universally good press on here, I think that is truer of Gurdy…

So, this will be interesting! :stuck_out_tongue:

Ah now TUG, it’s only the ESRI and the gubbermint spin machine that is telling us that negative equity doesn’t matter (it’s not about value, it’s about affordability). I doubt that anyone on here seriously believes it is not important?

Well, the next song in the hymn book appears to be: “NAMA for the little people”

A tune that strikes dischord with some around here… :laughing:

My guess is it’ll be bankruptcy for the little people :exclamation:

Well, on vera as the fella said…

The thing about Consty is he’s a classic economist in the sense of good on historical analysis, short on any proferred solutions or proposals for the future…

I’m amazed that those who seem to dipping their toes in NAMA for the plebs are not first arguing for wholesale reform of Irelands medieval bankruptcy laws. A friend of mine has left the country for work. Wife and kids will follow this Summer. NE is not huge (who knows what its worth) but there is 100k odd of personal debt resulting from a business that failed. The bank have added the biz debt to the mortgage and agreed to a short sale of the house that would leave around 120k still owed. No buyers though so the family have stopped paying mortgage and will leave without having the thing resolved. The bank will be left holding the house which will quickly deteriorate without maintenance and care. There is no reasonable way for this family to manage or discharge their debt without a bankruptcy option that offers something to them. Right now just turning their backs on it makes more sense than bothering with bankruptcy and its an insane financial decision for them to continue to pay on the whole amount while they are starting a new life abroad. I guess a lot of people will find themselves in a similar spot.