Would you rather tax gardens or jobs? The Site Value Tax debate
Fixing or just another fix? Budget 2012 and the property market
Ireland’s Budget 2012, announced earlier this month, contained a number of property-related measures. This post reviews them. One would hope at this time that any measures would be the bold actions of a government with a large majority trying to create a sustainable property market. Instead, they seem like the actions of an addict who just can’t give up. Unsustainably cheap credit can never be the answer, boosting confidence and finance has to be. Read more
“Hey, Enda, leave those banks alone!”
The last few days have seen the ECB reduce interest rates unexpectedly, leading to Irish policymakers and regulators threatening financial institutions who did not follow suit. Danish-owned National Irish Bank had planned on increasing its variable rates this week and indications today are that it will still do this. This post discusses that decision and what levers policymakers should – and should not – be using to protect current and future borrowers. Read more
Can Ireland improve its competitiveness while raising taxes?
Making Ireland a more attractive place for FDI, via making it attractive for workers to come and live here is difficult when the environment is one of higher and higher taxes. This post examines Ireland’s changing competitiveness. It first looks at how a family’s mortgage repayment will change between 2005 and 2015. It also examines how after-tax, after-rent income in Ireland compares internationally, finding that significant tax increases are compatible with international competitiveness when offset by falling costs of accommodation. Read more
Nine million jobs – the cost of inaction on the global debt crisis
The Nobel Prize in Economics, awarded yesterday, highlighted the important role of expectations. The IMF’s World Economic Outlook has given the world an important barometer of expectations about the economic climate and how they change over time. This post uses IMF figures to estimate how many jobs will be lost over the period 2011-2015 in the Eurozone, the USA and in the rest of the developed world, due to politicians’ inaction on the debt crisis over the last twelve months alone. Read more
An unwanted experiment: a modern economy without banking
Banking and credit facilitate economic growth and are among the foundations of modern, post-Industrial Revolution economies. This post explores the implications of living in Ireland, a country without the ability to borrow, either as a household or as a small business. It also focuses on the potential of online trading and why the current perverse policy of Irish banks in that area must change. Read more
Top Ten Facts in Relation to Ireland’s Mortgage Debt & Arrears
Sparked by some figures by Morgan Kelly and a pseudonymous letter to the Irish Times, the last two weeks have seen an immense public debate on the topic mortgage debt forgiveness. This post attempts to step away from the emotional charge of the debate. It examines ten key facts on Ireland’s mortgage debt, in relation to arrears, repossessions, mortgages being paid off and the labour market. It also presents an estimate of Ireland’s aggregate “loan-to-value” for residential property and a comparison with repossessions in the UK, before I give my own thoughts on the topic. Read more
Is Ireland a country for young people?
Last week, I was privileged to be invited to speak at the MacGill Summer School, which was celebrating its 30 anniversary. Throughout the week, there were various sessions, on health, education… the economy of course, and indeed political reform. One of the final sessions was based around the question “Is Ireland a country for young men and women?”. This post contains my speech. Read more
Are we nearly there yet? Finding the new floor for property prices
With the release of the latest Daft.ie House Price Report showing the average house price below €200,000 for the first time in a decade, this post examines three different ways of calculating what house prices in Ireland “should” be. The most straightforward way is to adjust house prices for inflation, but this may not reflect the transformation of the Irish economy since the mid-1990s. Two other methods – comparing to incomes and to rents – both suggest that the average house price should be about €150,000, a fall of 60% from the peak. If this is true, prices may bottom out in Leinster as early as next year and elsewhere by 2014. Read more