I know the recession will cause a lot of pain and suffering for many, but for those who don’t own property (or have a reasonable mortgage) and can hang on to their jobs, it won’t be so bad.
We have so lost the run of ourselves in the last decade (Grafton St among the highest rents of shopping streets around the world, €9 for a litre of posh “oxygenated” mineral water in Superquinn, etc. - what are we like?!?) that this recession will hopefully put us back in our place.
I think this article is a tad…obvious. The whole “point” of a recession is to return an economy to competitiveness. You could regard it as a financial instrument designed to trim a bloated economy that has become fat and lazy. So to cheerlead positive side of the recession is somewhat redundant. But if a recession is a financial instrument then it is a blunt instrument that does its work by the application of brute force. This injudicious application of force has two negative side effects. The first is that it might damage the economy so much that it might take a very long time for it to recover. The second is that even if you don’t lose your job you probably know somebody who will. I personally know three people in my closest circle of friends who jobs are at risk. But that only affects me in a peripheral manner. What if I was married and my spouse lost their job? The author of that piece rather blithely states
But if a spouse (or other family member who is part of an economic “unit”) loses their job then spending power for that unit will be dramatically decreased.
The author’s points aren’t without merit but I believe this recession is going to be much more painful than s/he realises. If this article was posted on the Pin I think it would probably get called on the glee policy and probably rightly so.
Obviously they don’t have workers being asked to take a pay cut or work a 3 day week to keep their job at the indo. I can’t imagine very many people’s wages are rising, and certainly any rise would be performance related (e.g. promotions, increased business for the self employed or increased bonuses for a tiny minority).
But of course the Sindo never let mere facts get in the way of a good rant.
Again, a complete failure to understand that falling rents are due to increased supply and falling demand. The idea that a landlord who sees his interest rate reduce and decide to pass it onto his tenants is as implausible as suggesting that lower property prices mean more people entering the buy to let market.
This is the bit that really annoys me. The people who were spending stupid money during the boom now seem to be the ones who will benefit from the bust. It boils my blood thinking of the naieve 20 somethings who bought apartments in 2005/06 and who now have lost their job and don’t know what to do while there are journalists writing rubbish like that.
Yes and the fact that this coincides with a global recession has the real potential of turning our “recession” into a prolonged depression.
We already have Clowen talking about a 5 year time frame to get our finances back on track and this can easily be doubled to ten years.
Alan Ahearne was interviewed today on RTE and he says house prices have fallen by a third already and if a house was put on the market now it would have to be discounted by way more than 20% from the peak price in order to have any hope of selling.He said we are no where near a bottom and prices will have to fall by as much again so you are looking at drops of well over 50% even though the ESRI are claiming falls of just 15%
When thousands of people realise that they are paying mortgages on houses that have reduced in value by well over 50% they are going to be less than happy to put it mildly and anybody that dared suggest [even here on the pin] that such a drop could occur were laughed out of town.
The big question now is how much greater than 50% will this drop be.
Ahearne also pointed out that rents are also falling and a house’s value reflects its rental value which is now a moving target.
On top of all this wages are also falling and will continue to do so and Ahearne sees house prices plummeting for another two years at least.