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For What it's Worth
Parts of the media have been oxygenating the glums in recent weeks.
Ah you know the type. They look at a dark cloud and see a hurricane
when all it is, is a bit of light drizzle.
Honestly you think we
were already in a time warp back to the grim eighties, like as if we
deserved it, suffering from our catholic sense of guilt for having a
good time, for living it up during the boom. That's what's always been
nagging away at the down-in-mouths, the stopped clocks, the doomsayers;
the awful sense of foreboding - that it was too good to be true, too
good for the Irish. Course it's shrouded in analysis like our reliance
on the construction sector, our minimum wage, our energy and waste
costs and that type of thing. I reckon I counted at least a dozen band
wagons taking off in the media in recent weeks as everybody from
opposition parties to business lobbies warned darkly the fires of
damnation awaiting the errant Irish.
Sure there's lots to be
fixed and improvements to be made and, yes, things will be a lot
tighter in the future to squeeze out more economic growth but, for
heavens sake let's look at it positively, as a challenge. Quality job
losses are a new trend. So far we'd avoided the scalpel as major
international firm's cuts global costs. That's now changed because our
productivity declined and we've slipped down the competitiveness
leagues. These things are measured by a mix of things like
infrastructure, government policies, flexible labour markets and the
efficiency of the public sector. Hey, but we're still doing reasonably
well and we're now, at least beginning to address the deficit in the
research and development sector. Anyway who said that, after
extraordinary economic growth, we could avoid an outcome where our
relative cost base would become an issue? I always thought that a
dulling of a razor sharp competitive edge is an inevitable outcome of
sustained growth. But sure, who am I to weigh up these mighty economic
puzzles.
And Oh My God, the property market is declining. Well
there's a shock. Like whoever said that property was the only
consistently rising asset class, that you can still squeeze out bumper
growth in prices even when interest rates are on the move upwards?
Honestly when I see headlines taking about "crashes" and "slumps"
accompanying declines of 10% to 15% in prices I'm reminded of that
moment in War of the Worlds when the nosey neighbours suddenly realise
that the alien that's come up out of the ground isn't going to love
them after all,, but laser them instead.
A fall in residential
prices, especially in weaker segments of the market, I would have
thought is an inevitable outcome at the end of a sustained property
boom. It's not a big deal and provided the global and Irish economic
ship remains in good health, prices are likely to crab sideways for a
long time yet. But there is no crash. Finally power is switching from
sellers to buyers after 13 years of uninterrupted growth where lucky
householders saw a tenfold increase in values. Surely that's enough,
enough pain for our young adults who now have the dignity of walking
calmly into the market to time their first home with their ability to
cope with repayments and fund a lifestyle. Ok, so sales volumes have
plummeted and lay offs in bloated real estate firms is inevitable, not
helped by all the politicking around stamp duty, but I, for one,
welcome the cooling - even if its costs me a few bob too.
Anyway
at the end of the day your home is just your home and not an
investment. If it bops around in value over your lifetime who cares so
long as you can afford repayments and its occupants are happy. So lets
keep a little perspective and get on with fixing the gaffe. More of
that in the next issue.
© Eddie Hobbs.com
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