Brendan Burgess
Founder
- Messages
- 52,117
they certainly help the vast majority of the consumer population in ensuring that house prices are not allowed run amok, with the result that it is consumers who end up picking up the tab via bailouts. That is certainly helping the consumer. Agree some bluntness to the rules, and they should be ironed out, unfortunately any set of rules to have teeth has an element of bluntness.
Price fixing never works and never helps consumers, Gerard. It simply distorts the market and creates side-effect bubbles and shortages elsewhere, for example in rents. The longer the price fixing goes on, the more grotesque these side-effects will be, until the artificial house-of-cards collapses.
The notion that consumers must fund the bailout of failed financiers is a particularly Irish one. It should not be policy and shouldn't be allowed temper policy.
So about half a point ahead of general inflation - isn't this roughly where it's "supposed" to be in terms of long term international trends? Can anybody who isn't an auctioneer confirm?Dublin [property] inflation slows to 1% year-on-year
I seem to recall a larger country to the west of us who did likewise. (No, not Iceland, father west again)The notion that consumers must fund the bailout of failed financiers is a particularly Irish one.
Maybe it shouldn't, but all evidence suggests that it is. Even if it weren't policy to bail them out, preventing financiers from lending recklessly would be a sensible protection for their shareholders and bondholders.bailout of failed financiers ... should not be policy
Relaxing bank lending won't build a single additional house, it will simply bid up prices.
By intervening in the market to suppress prices and supply, the State is already doing this.I recognise that may solve one set of problems potentially at the increased risk of creating others.
Agree but we saw what happened and the pressure applied. Much of the extravagant lending that ultimately led to the bailouts was precisely due to lax lending rules, excessive credit and a central bank and regulator asleep. Give us a proactive central bank and regulator, warts and all.
I think you'll find the yanks haven't wrapped their property market in cotton wool for the past 8 years.I seem to recall a larger country to the west of us who did likewise. (No, not Iceland, father west again)
Maybe it shouldn't, but all evidence suggests that it is. Even if it weren't policy to bail them out, preventing financiers from lending recklessly would be a sensible protection for their shareholders and bondholders.
This will indeed be the case in the short term, but we're currently in a position where the artificial suppression of house prices means that new house construction for sale is unprofitable. Fix the former and you'll fix the latter.
Agree to disagree so. Noting artificial in the CB ensuring sensible lending policies are adopted by the Banks. That is absolutely in the interests of the vast majority of consumers in Ireland. End of.
Its not a simple case of looking at one issue (such as lending) in isolation and blaming that for creating an artificial housing market.
We have a housing crisis. We need wholesale changes to fix it.But not wholesale changes.
I'd see the current situation as the hangover from a crisis of unsustainable private debt. From that perspective, facilitating more unsustainable private debt doesn't seem like a long term solution.We have a housing crisis.
I'd see the current situation as the hangover from a crisis of unsustainable private debt.
. I appreciate where you're coming from, affordability criteria are a significant state intervention in the market (though Brendan's recent figures suggest the effects are overstated), but I wouldn't expect an old regulatory strategy (ie. do nothing) to produce new results.
There is something highly artificial about a situation where we've needed tens of thousands of new housing units annually for several years and a combination of State policies and practices - including the imposition of arbitrary lending rules that may or may not constitute or facilitate "sensible lending policies" - have ensured that this demand cannot be met.
This is in nobody's interest.
Except I haven't done that. I've simply said that price fixing doesn't work. And the CB rules are a key element of an explicit price-fixing strategy.
We have a housing crisis. We need wholesale changes to fix it.
I may have misinterpreted your preferred approach to lending as "step back and let free markets sort it out". If I'm misrepresenting your position on the lending rules, can you spell it out for me?Except I haven't advocated that strategy.
I think you'll find the yanks haven't wrapped their property market in cotton wool for the past 8 years.
The State shouldn't be in the business of protecting shareholders and bondholders from their investee companies' own stupidity. And even if they are, there are surely better ways of doing it than grotesquely distorting the supply of residential accommodation with all the mayhem and misery that this brings.
To some extent, yes. All sorts of business can have negative externalaties - costs or risks which are not naturally borne by the business themselves.It seems that between one financial shift and another 60% of all USA mortgage risk has been effectively passed back to Joe Citizen.
Maybe that's how Capitalism works ie with implicit guarantees from Joe Public, ?.
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