full story …
full story …
Fiddling while Rome burned? Jim was down in the orchestra pit with the rest of them fiddling to beat the band until recently. But I suppose he’s entitled to change his mind and fair play he hasn’t skulked away into a dark corner, like some of the previously vocal champions of the bubble.
I suppose we should add the soubriquet “short-sighted” to any mention of our ‘leading’ economists.
I really thought economists were supposed to forecast the future, not just the next year. Expect paulian conversions for the rest of them soon. They’ll all be playing the french horn before you know it.
Just substitute “the housing bubble” for “social partnership” and you might be on to something there Jim.
I wonder about economists. I don’t think the phrase dismal science is apt at all. The dishonest science seems much more appropriate.
Is it just public jobs like media punditry that attract the kind of economist that’s great at telling you what they knew all along, but not great at telling you what they know now?
Are there guys and gals working quietly in offices around the world out of the glare of the media, giving good advise to their bosses and making predictions and assessments that are more likely to be right than mystic Meg.
Or do the media whores reflect the industry as a whole? Are those guys and gals in the offices explaining to their bosses that they knew all along that the global economy would end up costing the company billions? They just didn’t mention it before, because they hoped to keep the board room sentiment up.
Some day the current trouble will be over, the economy will tick along until a new boom settles over the country. Perhaps a craze for Father Ted festivals will bring a billion tourists a year.
And when that happens, and we go all-in on the new boom, does anyone really think that Jim Power or any of the rest of them will be able or willing to warn us in advance that we’re heading for trouble.
Or will they wait…again…until it’s too late, to tell us what they knew all along?
Ive stated in the past what the biggest problem is with economic predictions - they are based upon assumptions, the biggest of which is that all market participants act rationally.
In 2006, I saw people buy ‘investment’ properties that were yielding 2%, yet the interest repayments were at least double that. This was blantently irrational, yet people did it. Perhaps economic predictions only apply to those who take the rational course of action.
Blarneynomics its all part of the marketing mix. They know that most people have no understanding of how markets work, they know how to push the masses Freudian greed and fear buttons and they know that they’ll have covered their own asses when the balloon goes up. And they’ll do it again because its so f**king easy.
Yep, ‘rational choice theory’ is as flawed as they come.
There should really be much more use of path dependency and institutionalism theories to explain the impact of institutions on the choices people make.
Too right. Where is Desperate Danial lately? I knew we’d get the last laugh.
Pedantically speaking those are **Pauline **conversions Yoganmahew.
Adding value with every post - that’s my guarantee
Thanks for the heads up Aston.
Since you’re looking for pedantry, strictly speaking that would be “pauline” with a small “p” (as it is an adjective). And I am yoganmahew with a small why (as I am inquisitive).
Not sure if that ould turncoat St. Paul would necessarily consent to his downgrading. And even if he did would Beckett or Pinter or Kafka – all of whom have sired useful adjectives – be as modest?
I suppose it depends on what you define as a work of fiction:
(How did we live without wikipedia?).
I am happy to see Jim talking sense and identifying real challenges and pressures . From the correct identification of problems comes solutions.
Blithely peddling overpriced crap to the gullible is dishonourable, but that is all that some of his fellow ’ chief economistas ever do .
Lets hope Jim has seen the light , permanently . Well done for the moment Jim, good article. !
For my tuppence worth, whilst I am in agreement for the first time in years with Jim Power in what he has to say in this article, I won’t be as quick to forgive his previous scriblings and ramblings. Let’s not forget that he is one of the VI’s chief cheerleaders and his recent turn of thought should be no surprise to anyone here. IMHO he has just recognised a bit sooner than some of his peers in the VI camp that there is nothing to be gained in the present climate by trying to smooth over the steady stream of negativity and perhaps he has anticipated the fear, anger and revulsion yet to come. Better to state the obvious in the present climate to salvage credibility and direct the anger away from people like himself. That’s good enough motivation on a personal level for him and let’s not forget that the balance sheet of the bank he works for will suffer in this downturn so I also feel that there is a bit of managing expectations of the banks shareholders going on here. See it’s all that bloody governments fault!
Well there Jim the VI’s of which you are a part were equally culpable by driving up the prices of housing to levels which fed into the costs of everything else in the economy. Had there not been a cosy cartel between the VI’s gouging at the trough and screwing the life out of what was one of the most productive export economies in the world to turn it into the bob the builder economy then we might not be in so dangerous a position.
It’s not as if Power has said anything in that article, which has not been discussed on the pin before. Welcome to the reality you helped create Jim.
If someone doesn’t have the basic self discipline or income to scrape together a deposit, why do we think they can repay a 100% mortgage? They are an abomination and feed the “cheap credit with no consequences” generation.
It is fair to say that certain borrowers can sustain a 100% mortgage no money down, a qualified Doctor or a Dentist for example or someone with serious collateral to the value of maybe half to two thirds of the mortgage and who gives the bank a lien on that collateral for the whole 40 years. .
There are very few of these well collateralised individuals around compared to the number of 100% LTV mortgages that were given out in 2005 and 2006 in particular.
.again from GB’s link
so he was starting to cop on in October/November . Now if he could kindly explain WTF we are supposed to do with all these empties ??!!?
Nothing to do with the 100% Mortgage ARW. The key questions are can the borrower AFFORD to pay it back, what is he buying, and of course will he actually pay it back. When I bought in 1998, the most you could get was 92%, and I needed all of that 92% - still had to tap the folks for a handout. I was typical back then and I’m sure it is typical now. Most people buy at expensive times in their lives - marriage kids etc. Not having a 10+percent deposit tells you nothing about the borrower. It is easy for a bank to assess a loan application for both income and self discipline. That’s the basis on which the loan should be assessed - not LTV.
Having said all that you’re correct. 100% is unhealthy to say the least, because it creates a bubble in the end. 100% for a shoebox is crazy and should not be allowed. 100% BTL is even worse !!
And finally we have our old friend the 100% interest only !!! Throw in that it’s a BTL. Is it any wonder we’re in the shit here ???
Replying to this cause coincidentally I was reading this while browsin the PIN…
Wonder what our own regulators have in mind …