David McWilliams RTE programme on inequality

[galway_blow_in]

This type of allegation is without foundation and extremely annoying to those of us involved in managing an asset portfolio. In terms of the timing of asset sales the market back in 2010 - 2013 was at best volatile and at worst still in the process of bottoming out. many knowledgeable commentators were still forecasting further falls in property prices and there were very few buyers with available funds for the larger properties that needed to be sold. Yes, with the benefit of hindsight some of those properties should have been withheld from the market, but as a decision maker you are not in a position to take the risk of further drops in value on a signification portion of of your portfolio. Fair dues to the Comer brothers and others who had the funds available to take a punt in buying properties at a time when others had neither the risk appetite nor the funds to invest.
Perception and reality are somewhat at odds here as while it would appear on the face of it that NAMA and banks sold off properties at a fraction of their value, it is unlikely that this involved "sweetheart deals" in general (not saying that there weren't any!). Most of these deals would have been available to the rest of us had we the funds to avail of them.

so you think anyone who had the available means could have bought what they liked , i have my doubts and mr comer has increased those doubts by what he said

i believe even estate agents have preferred buyers a lot of time , never mind when assets are at rock bottom during a major economic crisis , politics is rampant in many areas of our economy and society , from AGS to NAMA

 

[Leper]

So the rich are not getting richer and aforementioned tables prove this. The poor are not getting poorer either, well if it says it in the tables, it must be true? Ol' Lep has called it all wrong per the "financial people" here.

But, I look around me and I see people in negative equity (rural and urban), I see more people begging in the streets. St-Vincent de Paul Society informs us that they've never been busier and seldom had less funds. People are being evicted from their homes by banks who were bailed out and helped through the taxes the same people facing homelessness.

Many cannot obtain mortgages for homes and continue to rent paying out even more and their money continues to go "dead."

David McWilliams takes to the television airwaves and tells the truth of the increase of the gap between rich and poor. He supplied cogent arguments. Did you see the look on some of the faces of some of his interviewees? They appeared not to want to admit of the millions they were making. In what kind of tv show did they think there were appearing? I reckon most of them regretted taking part in the programme.

David McWilliams never said he had a solution to what was going on. Merely, he pointed out in easy terms what is going on. Meanwhile, much of our population has emigrated. Many endured cuts in wages. Many suffered unemployment. And you say the poor are not getting poorer and the rich are not getting richer - I reckon many of us on this forum need a Reality Check.

 

[Brendan Burgess]

Hi Leper

There are simply no data to suggest that the rich are getting richer and the poor are getting poorer. The "data" used by McWilliams do not show it. The rich may be getting richer, but there are simply no data to suggest it.

You quote some examples. But a lot of rich people lost all their wealth and have gone bankrupt. I don't know if one balances out the other or not.

There are virtually no evictions by the banks, contrary to the headlines in the papers. Go down to the Registrar's Court in your local area and see for yourself.

The banks were not bailed out. The depositors, most of whom were ordinary people, were bailed out. They should not have been. It was a transfer from tax payers to people who were well enough to have deposits.

McWilliams did not supply one cogent argument. He told nonsense stories.

I agree with you about one thing. I have no idea why those guys agreed to be interviewed. It's probably the Hello effect, where people like flaunting their money. But I thought that Comer was a private enough guy. I had not really heard much about him before.


David McWilliams never said he had a solution to what was going on.

Well the promo for the programme certainly did:

David will suggest a radical solution at addressing this that does not require new taxes but addresses the imbalance and will incentivise people and give them a greater stake in our economy.

He offered no solution at all other than to increase taxes on large multinationals. This would have zero effect on the distribution of wealth in this country. The problem is that the audience would not like the only solutions to wealth inequality - increases in property tax, Capital Gains Taxes and taxes on gifts and inheritances and the introduction of a wealth tax. Of course, there are other solutions as well, such as barring wealthy people from the country and forcing pensioners to give a share of their pensions funds and savings to young families.

McWilliams always has populist simple solutions. Guarantee the banks. Exit the euro. Default on our national debts. Write down mortgages.

The problem with them is that they are neither simple nor solutions. Each has a huge cost as you and I now know about his wonderful cost-free solution of guaranteeing the banks.

Lenihan's masterstroke

 

[Bronte]

Dan O' Brien in the Indo not afraid to take issue with McWilliams assertions:

Hard data shows 'great wealth divide' is not as big as you think

 

[Bronte]

So the rich are not getting richer and aforementioned tables prove this. The poor are not getting poorer either, well if it says it in the tables, it must be true? Ol' Lep has called it all wrong per the "financial people" here.

But, I look around me and I see people in negative equity (rural and urban), I see more people begging in the streets. St-Vincent de Paul Society informs us that they've never been busier and seldom had less funds. People are being evicted from their homes by banks who were bailed out and helped through the taxes the same people facing homelessness.

Many cannot obtain mortgages for homes and continue to rent paying out even more and their money continues to go "dead."

David McWilliams takes to the television airwaves and tells the truth of the increase of the gap between rich and poor. He supplied cogent arguments. Did you see the look on some of the faces of some of his interviewees? They appeared not to want to admit of the millions they were making. In what kind of tv show did they think there were appearing? I reckon most of them regretted taking part in the programme.

David McWilliams never said he had a solution to what was going on. Merely, he pointed out in easy terms what is going on. Meanwhile, much of our population has emigrated. Many endured cuts in wages. Many suffered unemployment. And you say the poor are not getting poorer and the rich are not getting richer - I reckon many of us on this forum need a Reality Check.

I travel back to Ireland fairly regularly and I can only guage things on what I see. Two of my family have secured permanent jobs this year. No one now is unemployed which wasn't the case before, except for the one that appears to me not to want a job. Another family member turned down permanency as they hope to move on. The debts are starting to be repaid. The bank will take two properties but the people involved live in a better property, yes it's rent, but it's better than what they purchased and a lot less than the mortgage.

There's an increase in traffic, a sign of people in jobs.

I dispute the Charity sector in relation to the numbers. I'd like to see an analysis of what the reality is, or is it charities are cashing in. I don't know. Who exactly are getting charity and why.

Does NE matter if you're able to afford to pay back your mortgage?

What I don't see is young people bying brand new cars on credit, I don't hear stories of people buying houses and borrowing money to go on holidays four times a year, no stories of mad credit card spending, no weekend trips to NY.

You might consider me one of those 'rich' well I'm down massively from the boom, including one NE property. No recovery in property for me, so I've no idea who is really rich. I'm looking at auctions in Ireland and I see no recovery in property, quite the opposite - not Dublin obviously. As a landlord for the last few years I'm mad at myself for not cashing out and wondering how on earth it's worth it. Can't begin to imagine it must be like for those landlords who bought at the height on interest only, they are the ones who really have lost it.

I think there has been merely a readjustment to reality from craziness. And people who spent unwisely have had to be very careful for a few years.

 

[Leo]

was not my intention to slight the comer brothers at all , the big pile he got for 900 k looked like it was more of a grand home than somewhere the vast majority of people would like to invest in , he did however say that they started buying around the time the IMF arrived , looking at data from myhome etc , we are led to believe the bottom was sometime around the middle of 2012 , comer implied that the big money was in swooping on assets at least a year earlier than this , i took this to mean he was talking about stuff which was,nt on the open market

Their purchases have been well documented over the years, seems they'd been focusing on investing since 1992, but significantly ramped up in 2010 when they saw more value in the market. No reference anywhere to any purchases that weren't on the open market.

I'm sure there were deals to be had that weren't publicised to a great degree, but that's the nature of an open market. People are free to sell as they see fit. The media at the time weren't reporting much on the commercial property sector either, so to an outsider, it might not look like there was much of an open market. However, if you're suggesting receivers or NAMA conducted shady deals, then that's another matter entirely. Is there anything NAMA have sold off that hasn't gone on public record?

 

[Bronte]

I'm sure there were deals to be had that weren't publicised to a great degree, but that's the nature of an open market. People are free to sell as they see fit. The media at the time weren't reporting much on the commercial property sector either, so to an outsider, it might not look like there was much of an open market. However, if you're suggesting receivers or NAMA conducted shady deals, then that's another matter entirely. Is there anything NAMA have sold off that hasn't gone on public record?

Try and much as everybody seems to do, but so far I've not seen Nama do anything shady. Sure Project Eagle is shady but not because of them.

The Irish property market unless I'm mistaken seems pretty open and transparent, maybe it's not the case for big deals. But anyone in the last couuple of years with any few bob could have been buying up vast amounts of property, without no CGT and no doubt in 10 years time if they recover and people make a killing we'll have everybody saying it was a shady deal. And that the CGT exemption was to profit the FG/Lab friends.

 

[Conan]

Two of the bigger purchasers of commercial property over the past few years have been Hibernia REIT and Green REIT. Both are publically quoted companies on the Irish Stock Exchange and anybody could have both shares in either or both (not just exclusively the super wealthy as DMcW suggested).
DMcW is the typical economist looking in the rear view mirror and telling us what has already happened. People or investors with funds took investment risk post the "crash" by buying property when many economists (DMcW, Brian Lucey, Constantin Gurdgyev etc) were telling us that Ireland would need a 2nd bailout, should leave the Euro, should default of debts etc. Now that some of these investors are seen to have made a profit on their investment the likes of DMcW are suggesting that they clearly bought the properties on the cheap or that NAMA should have held on to the properties. Hindsight is wonderful. I suspect that had property prices actually fallen further he would been just as quick to criticise NAMA for not selling at the market price.
DMcW's "reputation" seems to be based on getting one prediction right (the property collapse). But just because he got the winner of one Grand National does not mean that all his future tips are sure fire winners. We don't hear much from him about his recommendation to Brian Lenehan re the Bank guarantee?
Dan O'Brien is absolutely correct in his criticism of DMcW programme. God save us from "celebrity economists".

 

[44brendan]

The reason I have a problem with D McWilliams is nothing to do with his populist approach to Economics nor his subject matter. It gets down to his total subjectivity in terms of ignoring facts that don't suit his arguments and putting forward his opinions as facts.
The subject of his programme was good and there may well be a case to be made for inequality of wealth distribution. However he is a professional economist and not alone that but is teaching the subject to our graduate students. How can be possibly hold on to his professional credibility and pass on a professional standard to students while at the same time produce "puff economics" with no credibility for mass distribution?

 

[Fella]

I bought more shares today , maybe i'm one of these rich people he talks about that invests in shares and assets . What if my shares do really bad and I lose half my investment , there are no gaurantees , ridiculous aftertiming programmes like this appealing to the masses makes me sad , they should take his degree off him or whatever he got in college for been an idiot.

 

[cremeegg]

I have been thinking about this idea about the rich getting richer after the bust. We have seen the statistics but perhaps a personal experience of mine may shed a particular light on it.

In 2011 I tried very hard to buy an investment property, the property was well advertised in the press and online. I gathered every penny I had, I got a friend to contribute some money and I went to the bank, who agreed to loan me up to 70%, so in effect I had 2 and a third times my deposit available to bid on the property. I bid the maximum with the auctioneer but the property was sold to someone else.

Although I do not know for certain who bought the property, it is generally believed that it was the Comer brothers.

In my opinion the property was sold for less than half what it was worth, based on rental income. Thats why I tried so hard to buy it. The reason it was sold so cheaply is because no one offered a higher price. The price paid is publicly available in the PSRA register and is about 30% more than I bid.

As rents have increased considerably in the meantime the property is now worth maybe 3 times what it was sold for.

This is a clear example of the rich getting richer. The Comer brothers made this profit not me, because they were richer than me to start with.

However I feel absolutely no sense of grievance over this, they offered the vendor more than I could so they got the property. The fact that the price is in the public record is an excellent thing.

My conclusion is that in a capitalist economy saying the rich get richer is like saying Dublin won the All-Ireland because they were better footballers. An obvious truth but not necessarily a cause for complaint.

 

[Brendan Burgess]

Hi cremeegg

That's a great story. But it's not because the buyer was richer. It's because they bid more than you did. Would you have bid 30% more if you had loan approval for a larger amount?

in a capitalist economy saying the rich get richer is like saying Dublin won the All-Ireland because they were better footballers.

That is a great one. One could write a great skit on the McWilliams programme referring to football teams. And the solution to Dublin winning the All Ireland so often? Tax the multinationals.

Brendan

 

[Descart]

Is this a slag fest of a professor of economics who called it right in relation to the property bubble in this Country, when all those other economists ( being in the pocket of the banks ) talked up the market. The programme is aimed at the general audience not academics and is meant to be entertaining and somewhat enlightening as to what happened.

 

[44brendan]

The programme is aimed at the general audience not academics and is meant to be entertaining and somewhat enlightening as to what happened.

Nobody is disputing the core rationale of the program Descart, nor as far as I am aware is there any disagreement on an Economist simplifying issues to clarify them for a general audience. This is to be welcomed rather than censured. What is of great concern is that the information and findings of the programme were totally skewed and distorted to the extent that facts were presented that were both irrelevant and incorrect which should never be permitted to happen unquestioned on the public airways whether it is David McWilliams or any other presenter making the case.

 

[Duke of Marmalade]

Is this a slag fest of a professor of economics who called it right in relation to the property bubble in this Country, when all those other economists ( being in the pocket of the banks ) talked up the market. The programme is aimed at the general audience not academics and is meant to be entertaining and somewhat enlightening as to what happened.

It was entertaining. It should have stuck to stories of private jets, million euro watches, Ferraris, guys making a killing by plunging in when all around were saying we're doomed. Even replays of when He told us so and Bertie's hilarious suicide speech are always worth a watch.

But when he juxtaposes this with austerity protests and weaves a totally spurious morality tale about a conspiracy by a tiny elite of insiders against the rest of us He actually becomes dangerous. There is no smoking gun here - read Dan O'Brien, we are actually near the front of class in both overall prosperity terms but also in terms of distribution of income and wealth.

 

[Descart]

Yes, his presentations are like his books, quirky ! I think the documentary " inside job " sums up the moral compass of a lot of eminent economists and just who are the puppetmasters pulling their strings ?

 

[Leper]

Is this a slag fest of a professor of economics who called it right in relation to the property bubble in this Country, when all those other economists ( being in the pocket of the banks ) talked up the market. The programme is aimed at the general audience not academics and is meant to be entertaining and somewhat enlightening as to what happened.

Descartes, I think you have called it right. We have our own "economists" on this forum entertaining themselves. They are like guitarists who meet each other for the umpteenth time before a music festival and entertain each other using obscure chords, strange sounds and their own take on music and lyrics. That's great among the musicians but when they bring the same to the stage they are not aware that they are not entertaining the paying audience. The best example of what I can come up with here is that - wait for it - the banks are not repossessing property and there is no proof thereof as outlined a few posts back. But, I have seen two letters from banks in the past week informing people that they will have to leave their homes before the end of November.

And . . . the classic . . . there is no proof that the rich are getting richer . . . perhaps I'm going blind? The only people with money are the rich, they sat on their riches and when prices bottomed out, they bought (or invested). I am not saying there is something wrong with this. I'm just saying it is obvious that the rich are getting richer. The coping class cannot get their mitts on any money to invest. There we go again, reduce the demand and the price reduces too.

I'm getting worried. Some posters here who I thought to be bordering on brilliance appear to be not that brilliant. Perhaps this is why David McWilliams didn't have them on his programme?

 

[Conan]

Leper,
I always question it when someone says "it is obvious that the rich are getting richer (or the poor are getting poorer)" and offer nothing to back up the opinion. I was not looking for DMcW to entertain me on Mon. If I want entertainment (as opposed to information) I can watch Mad Men etc. But that was not what the DMcW program promised.
Equally suggesting that the "rich" just sat on their money and them somehow took advantage is simplistic. Does that include Sean Quinn, Sean Dunne and the numerous builders who went bankrupt. The "rich" are not a homogeneous group. Some made sensible investment decisions and some did not. Not greatly different to many others (other than perhaps the scale).
Other than Danny McCoy (an economist) who challenged DMcW, the rest of the (edited) contributors were ones who agreed with DMcW opinions (masquerading as facts).
I maintain still that the whole program was nothing more than entertainment economics, and would not have been out of place on Comedy Central.

 

[Bronte]

Is this a slag fest of a professor of economics who called it right in relation to the property bubble in this Country, when all those other economists ( being in the pocket of the banks ) talked up the market. The programme is aimed at the general audience not academics and is meant to be entertaining and somewhat enlightening as to what happened.

If it's meant to be entertaining why is it classified under Factual' by RTE rather than 'light entertainment'?

(Unfortunately it's not available on the player so I've been unable to watch it)

 

[Gordon Gekko]

Sorry, but the "data" is utter nonsense and conjecture. The Sunday Independent Rich List is the source of core data and it's more or less made up. They have no idea what anyone's wealth is. The programme was a complete joke and one has to question the wisdom of guys like Comer and Nowlan who chose to appear in that context.