Eddie's Articles

For What it's Worth

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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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