Who gained from the bubble

The fact that our banks need to be recapitalised to such a serious extent despite the money flows that occured must be a pretty good indicator that the money has taken flight to other lands and is not sitting within these shores. Probably through things like share purchases etc as pointed out by another poster.

https://www.mapsofworld.com/images/world-countries-flags/germany-flag.gif https://blogs.fayobserver.com/faytoz/files/2009/05/old-people-crossing.gif

1/ Government in the form of stamp duty and other taxes ( which bertie ahernia proceeded to squander on social partnership and welfare)
2/ Anybody who sold and didnt buy or possibly downsized
3/ People who sold land for developement from landbanks and also I would assume that includes farmers (probably on advice from their bank manager who then advised them to invest in bank shares and other proerty deals the bank was promoting)
There are probably lots of others who benefited and lost it as a result of bad advice.

Would that show up anywhere? What I mean is I can dimly remember news articles about how Irish investors were buying more property in London than Saudis (or whoever). If that’s where the money went, we should be able to trace it through assets owned abroad by Irish residents, or something.

You don’t put that kind of money in a bank account. Instead you buy bank bonds and get a far greater return. The manner in which FF are determined to protect the bondholders suggests to me that this is where their patron’s cash is.

Okay, let’s start doing some sums.

I’ll start with cars.

[code] Passenger Commercial Heavy Buses Total/year
2006 178,826 40,591 5,895 403
2005 171,732 36,844 4,858 272

Average €15,000 €20,000 €40,000 €80,000
2006 €2,682,390,000 €811,820,000 €235,800,000 €32,240,000 €3,762,250,000
2005 €2,575,980,000 €736,880,000 €194,320,000 €21,760,000 €3,528,940,000
[/code]

The average is a wild guess at the average price, that is, the import price. Any corrections/clarifications welcome.

Since we make, eh, 0 (zero) cars in this country, over 3 bn (three billion) a year of wealth left the country each year. Or rather, it would have if they were bought with cash. Many were bought with credit, so 3 bn (three billion) of cash plus interest will leave the car over the next 3-5 years after the car was registered.

Unless of course, you took an equity release for the car. In which case, it will be 20, 25, 30, 40 years before the negative wealth effects of buying the car disappear, with the best case being that you paid almost twice the price of the car (taking interest payments into account) and the worst case, eh, somewhere above that!

Now, how many plasma nike ipod smeg laptops in everyroom did we buy?

How about turkish trabertine? (whatever that is).

What proportion of a house is built with Irish materials?

What proportion of the interior kit-out is?

How much do those german taps cost? How much!?

Some of it is just stuff that we don’t make (because the domestic market is too small and the international market too competitive). Much of it is bling. The part that isn’t either of the above, is tat.

So, where did it all go? We spent it. If it wasn’t on stuff, it was on coke and booze and foreign holidays. Some, at least, was well spent on golf and spa holidays in the country (however much we denigrate the ridiculous tax concessions, it is at least spending within the economy).

And that’s before we even get to the pyramid.

From Turkish travertine to Anglo Irish…business.timesonline.co.uk/tol/business/industry_sectors/construction_and_property/article5554017.ece

Anecdotal: my Da was telling me of a local farmer who sold his land, put it in bank shares, lost the vast majority of it and now is unable to pay Revenue the tax he owes.

I think the tax bit is probably rubbish. The tax is due in the year the land is sold.

The rest of it is, sadly, entirely creditable. Irish retail financial advice has the depth and breadth of experience as a goldfish bowl. The advisor usually has a memory to match…

That’s fine, and broadly credible as a starting point. But it would strike me that this explanation would need to be fleshed out. (I’m not suggesting by you - I imagine that like me you’ve to spend days making a living, I’m more thinking of the absence of analysis and comment by the media).

First up, as you say, much of that expenditure was funded by credit. So I’d expect that if we added up all the money spent on holidays and cars and so forth, we’d need to deduct the increase in non-mortgage related personal credit to see the amount that might be accounted for by gains from selling land.

Now, you’ll understand, I’m not suggesting that all that speculative gain was sensibly invested. All I’m really saying is I’d like to see it boiled down as precisely as possible. For the sake of argument, Dublin Port seemed to get a one third share of the €412 million paid for the Glass Bottle Factory. That’s nearly €140 million. So where is that? It must be somewhere on their balance sheet - and presumably they didn’t just take it and buy a Porsche for each of their staff.

I think an awful lot of the guys who appeared to making a lot of money have blown it and are probably bankrupt…in 2007 they all rushed into UK commercial property on a leveraged basis and then sterling dropped 10 - 20% and also the market by 40% in the meantime.

Derek Quinlan and the kingspan could fall into this category.

Most of them became too cocky and believed there own hype …i think the refurbishment of shelbourne hotel cost something
like 1 million per bedroom …so for that to pay intrest on a loan at 6% would require 60,000 euro profit per room
or 200 euro per night.

It is frightening how deluded the guys came.

A lot of these struggling guys still own houses on shrewsbury road and i am sure have cash salted away somewhere
and may end up bouncing back to some degree like larry goodman who was seriously broke at one stage but
because he owed the banks so much they had to work with him. Little guy does not get this chance.

I still think a lot of guys yet to fall who will fall…

THehe doyle who owned jury are obvious gainers and NTR guys …who may be interrellated.

You could say the gainers are the peoples salaries who jumped in boom but did not borrow …employees
in banks have not felt the pinch yet …staff in insurance companies who managed to lose a lot of peoples
wealth in their pensions have not felt the pinch yet… .GP’s charging exorbitant prices…

Solicitors and accountants stil charging boom prices but i assume their general business has been hit.

I think this is a really good question because there seems to be a prevailing view out there that there’s a huge pot of money and we just need to find a way to get a slice of it to recover our public finances - Vincent Brown never stops harping on about how we are “one of the richest countries in the world” (& when Jim Power tried to inject some economics 101 into the discussion VB didn’t want to know).

Anyway to me this is one of the things holding us back from recovery now - the idea that we really are “rich” and this recession thingumy-bob is just a bad dream that will go away quite soon…

My view is that we (most of us) were not really rich - the trappings of riches (new cars, bigger houses) do not make people “rich” even though they might appear so. So lots of people are still living in the big houses and driving the big cars, but a lot of them cannot support this lifestyle (and arguably never could). It’s a bitter pill to swallow to recognise that we were not all that talented after all - we just got caught up in a massive asset-bubble. It’s a pill Irish people generally don’t want to swallow.

Of course a few crafty people made a killing - that’s always the way.

Interesting. A female friend of mine decided to do some volunteer work back in 2005.
She had a stint with St. Vincent De Paul.
I remember asking her what kind of people were they helping given we were supposedly in a boom ?
She said that post Xmas there were families who overspent on Playstations / cigarettes / nikes / man U. tops etc would come looking for handouts.
They were of course given cash.
This was repeated year after year.

I wish I had read this before making my donation this year. I always thought it was some poor lad on the street who would get a hot meal etc not some family putting little Johnies playstation before food XX

Dont think it’ll be repeated this year, for one the SVP are struggling as it stands to help the growing amount of people out there who need it but on the other I have heard from one person whose been a volunteer for over a decade when giving my own couple of bob to the cause.
Some of the stories of ignorance and entitlement from people I found to be shocking and instead of being greatful for getting help it was more like “wheres mine?” So will it change come the new year? We’ll see wont we.

Incredible…thanks for that,donation of e250 to SVP was on my to do list for tomorrow,having read what that donation was to be used for I will keep it in my pocket,I am certain I too can find numerous ways to piss it away myself.

How about the simon community? Nasty time of year to be homeless.

The Simon community it is then!Dont know why I didnt think of them first,thanks for that.

To foretell the future, think like a banker


The banker’s guide to owning it all

goldismoney.info/forums/show … p?t=435714

Found this via iTulip, comments are very interesting.

https://www.eres.org/eres2005/hok.jpg

20 June 2006 Savills acquires Irish commercial property advisor Hamilton Osborne King (IR)
holland-re.com/system/main.p … ctid=10242

28 July 2006 MyHome.ie sold to Irish Times for €50m
rte.ie/business/2006/0728/myhome.html