Still in opening skirmish mode, yeah.
It's back the 80s all the way for me now. I can't see any way to stop the slide. The entire political class seem to be oblivious to the problem so nobody is even thinking about doing something; the entire country is still floating on an ocean of spin, waffle and denial; and the only sector of the economy that looks like making money over the next 2-3 years is agriculture!
How the hell did we find ourselves in such a position? Oh yeah, we put Ahern in charge
Its a bit more than that I think. We've been reminded we're one of the world's most open economies for the last ten years. We had a chunk of inward foreign investment in the 1990s and early 2000s that gave money to buy houses at the same time as boosting population - less outward migration and more inward - just as the baby boom generation was ready to be lured into the housing market. There was need to boost housing production - it was done but to a poor building standard that is going to cost a fortune to heat.
The economy overheated very quickly and by 2002 our competitivity and export performance started to slide. Government used up the profits of the real boom to generate a fake one based on construction and public service jobs expansion.
At this stage, to make sure that construction warmed up from overheating to incineration levels they threw in tax cuts (more money), tax incentives for building, a massive road building programme all of which fuelled building cost inflation. House price inflation was boosted by development contributions for infrastructure and other tax and most importantly by a long period of low interest rates held by the ECB because of the stagnant German economy. Half of the cost of a house was going straight to the government who recycled the loot as public sector wages and vanity projects. The two things most important to their "knowledge-based economy" - third level and broadband - were starved of resources.
As supply overtook market demand in 2006 -7 the Banks sold off their own property portfolio and leased. That didn't stop them lending on the back of overvalued property securities. Were there bonuses involved? Were there F!
With our economy having moved from one of the most to one of the least competitive in Europe in less than 10 years, the well paid jobs began to pack up and leave.
The US recession hit bank's liquidity, oversupply and slacking demand with fears of unemployment pushed prices into a steep slide. The German economy has sparked up and interest rates will be high for as long as the Germans have any fear of inflation. Trichet told us last week to F off with our basket case economy and take the pain. Construction jobs are evaporating and manufacturing going to Poland or contracting because of the US and UK recession. Options for emigration are poor.Retail business is down to the level of 21 years ago.
Even if anyone was buying houses half the country has not sewerage capacity left and can't be built on. A sizeable slice of the population even in the boom couldn't afford to buy and very little social housing was built. The waiting lists are enormous.
There is a real danger of a collapse of Irish banking, with the Irish government not allowed to bail out without the OK of the ECB.
Bank Santander - Parisbas or whatever in Ennis High Street in five years any bets?
Unlike the 1980s, we have the gathering together of spiralling construction and non-construction unemployment, rising interest rates, liquidity crisis with end-of-oil petrol and food inflation. Personal debt is much higher than in the 80s.
Your worst case scenarios look rosy to me.
Possibly the most comprehensively bearish first post ever.