For Those Who Shouted Stop, He Salutes You

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Juliendavid_on_primetime_2003KellyFor the rest of YOU.

No Mercille!

You might recall last week’s post concerning Dr Julien Mercille (top), of University College Dublin and his report into the Irish media and the property bubble.

His academic paper claims that organisations such as the Irish Times, The Independent group and RTE helped stoke, sustain – and ultimately fail to warn people about the dangers of – the bubble.

Having now read  the report.

It wasn’t all bad news..

Dr Mercille (who has given us permission to quote from his findings), writes:

“In Ireland, economist David McWilliams (centre) warned unambiguously about the unsustainability of the boom as early as January 1998, when he wrote that ‘fundamentals count for nothing if your house is built on a bubble’ and pointed to the fact that mortgage lending in Ireland ‘has been growing at 15 per cent per annum for the past four years. This cash has been funnelled with the help of significant fiscal incentives, into bricks and mortar, pushing, as we all know, prices through the roof. On top of this, general credit in the economy is up more than 20 per cent in 1997 alone. A quick glance at property prices suggests that we are definitely entering asset-price bubble territory’. Until the crash, McWilliams has been one of the few analysts in Ireland to warn publicly and explicitly about the growing housing bubble and its eventual collapse. Another Irish analyst to have done so is Morgan Kelly (above). He looked at nearly 40 property booms and busts in OECD economies since 1970 and showed that there is a strong relationship between the size of the boom and ensuing bust: typically, ‘real house prices give up 70 per cent of what they gained in a boom during the bust that follows.”

“Kelly observed that, between 2000 and 2006,house prices in Ireland had doubled relative to rents, while the price-to-income ratio had also significantly outpaced its historical level. This showed that Irish property prices were no longer sustained by fundamentals such as rising employment, immigration or rising income. He predicted a fall in real house prices of ‘40 to 60 per cent over a period of 8 to 9 years’, which seems relatively accurate as of this writing.”

But.

The prevailing mood was such that:

“Marc Coleman, the Irish Times economics editor, wrote as late as September 2007 that: ‘Far from an economic storm – or a property shock – Ireland’s economy is set to rock and roll into the century’. In fact, ‘Ireland enters the 21st Century in a position of awesome power’.

[Of Brendan O'Connor's June, 2007 Sunday Independent column: 'The Smart, Ballsy Guys Are Buying Up Property Right Now'] “(The article was) urging Ireland’s readers to buy property, saying himself: ‘Tell you what, I think I know what I’d be doing if I had money, and if I wasn’t already massively over-exposed to the property market by virtue of owning a reasonable home. I’d be buying property. In fact, I might do it anyway…anyone who is out there in the jungle will tell you that it is a buyer’s market big time’

Dr Mercille gives four reasons why the media may have sought to downplay the bubble and its dangers.

1) The news organisations have multiple links with political and corporate establishment, of which they are part, thus sharing similar interests and viewpoints.

2) Just ‘like elite circles’, they hold a ‘neo-liberal ideology’, dominant during the boom years.

3) They feel pressures from advertisers, in particular, real estate companies.

4) They rely heavily on ‘experts’ from ‘elite institutions’ in reporting events.

He writes

Irish news organisations are large private or government-owned institutions, and as such are themselves part of the corporate and political establishment…”

“…The overall point is that news content reflects economic and political elites’ interests and views. The Irish media can be seen as neoliberalised, in line with Ireland’s political economy. Over the last several decades, mergers have reduced the number of smaller, independent regional news organisations and increased the concentration of ownership, while the liberalisation of the industry has allowed a number of foreign companies to take stakes in the Irish media. It has been argued that increased commercialisation has contributed to a shift away from investigative journalism and toward a ‘tabloidisation’ of the news.”

Dr Mercille says because the property boom helped key sectors of the Irish corporate and political establishment, “it was never seriously challenged”.

“Government-owned media are by definition controlled by the government to a greater or lesser extent, through funding and appointments of principal officers. In theory, state-owned media could be more representative of popular concerns than private media since they are part of the democratic structure of government. However, this only goes so far as the government is democratic and, in Ireland as elsewhere, national politics are largely dominated by a few parties representing various factions of the establishment.” 

“In 2008, PricewaterhouseCoopers conducted a detailed study offering a comprehensive look at the ownership, size and concentration of the media in Ireland that illustrates the above statements. Independent News & Media (INM) is arguably the dominant media conglomerate and is listed on the Irish and London stock exchanges. During the housing bubble years, it generated annual revenues of €1.67 billion (2007 data), owned 200 newspapers and magazines, 130 radio stations and 100 online sites in Ireland, the UK, South Africa, India, Australia and New Zealand. In Ireland, it owns seven national and 17 local newspapers and 27 websites. Some of those are leading titles, such as the Irish Independent, Sunday Independent, Sunday World and Irish Daily Star.

“Its main bankers are Bank of Ireland, AIB and Ulster Bank Ireland, which were all deeply involved in the housing bubble. Its board members and directors are establishment figures, including the financial sector. For example, board members have included Brian Hillery, a Director of the Central Bank of Ireland and former Fianna Fail member of parliament, Dermot Gleeson, the chairman of AIB during the housing bubble years, and B.E. Summers, a director of AIB.”

“The Irish media even acquired a direct financial interest in the sustenance of the real estate bubble by acquiring property websites. For example, in 2006, INM bought PropertyNews.com (along with the PropertyNews monthly newspaper), the ‘largest internet property site on the island of Ireland’ listing ‘nearly 20,000 properties for sale’. In 2006, the Irish Times, Ireland’s newspaper of record, also bought the property website MyHome.ie for €50 million, along with the website newaddress.ie which aims to make it easier for home owners to move residences. The Irish Times’ board has also been replete with individuals linked to the corporate and political establishment. For example, during the bubble years, the board included David Went, CEO of Irish Life & Permanent, an Irish bank deeply involved in the housing boom.”

“RTÉ is Ireland’s state-owned media organisation and dominates the television sector. It is funded through advertising revenues, indicating an important commercial dimension, and also by the government through license fees collected from the public. The government appoints RTÉ’s board, giving it additional influence on the organisation.”

During the boom years, RTÉ had as chairman Patrick J. Wright, who was at the same time a director of Anglo Irish Bank, which epitomised more than any other bank the excesses of the Celtic Tiger and property lending. In 2006, Mary Finan took over as chair, with a resume including positions such as director of the ICS Building Society, a Bank of Ireland subsidiary mortgage lender that offered 100 per cent mortgages from 2005 onwards and was eventually covered by the 2008 government guarantee.”

In relation to advertising, Dr Mercille writes:

“The Irish media received a large amount of funding from property advertising during the housing boom (and, as seen above, they even became owners of property websites). Most newspapers published weekly supplements for commercial and residential property, ‘glamorizing the whole sector’, while ‘Glowing editorial pieces about a new housing estate were often miraculously accompanied by a large advertisement plugging the same estate’, in the words of Shane Ross, former Sunday Independent business editor.

“Ross also shows the power of advertisers’ in influencing news content when he states that: ‘Unfavorable coverage of developers and auctioneers in other parts of the newspapers was regularly met by implied threats from property interests that advertising could go elsewhere’.

“Moreover, a journalist working for the Irish media stated that journalists ‘were leaned on by their organisations not to talk down the banks [and the] property market because those organisations have a heavy reliance on property advertising’. As Irish Times columnist Fintan O’Toole remarked: ‘There is no question that almost all of the Irish media for the last 10–15 years has had a crucial economic stake in a rising property market. Because property advertising is very lucrative and is a very important part of what makes the Irish media tick’.

Noting previous research [by Declan Fahy, Mark O’Brien,Valerio Poti, who interviewed Irish journalists about their work practices], Dr Mercille writes:

“One said that because of the need for regular contact and interaction with financial sources, ‘some journalists are reluctant to be critical of companies because they fear they will not get information or access in the future’. Another said that ‘many developers and bankers limited access to such an extent that it became seen to be better to write soft stories about them than to lose access. Extremely soft stories would be run to gain access’ to them as well. Threats of legal action limited the possibility of undertaking investigative financial reporting because banks and real estate companies could easily drag news organisations into expensive legal procedures, so that ‘Very often a threat of an injunction is enough to have a story pulled’, while many legal actions by powerful individuals or corporations are ‘executed purely to stifle genuine inquiry’.

One journalist even mentioned that reporters face much pressure from the industry to influence news content, and that it is ‘well known that some PR companies try to bully journalists by cutting off access or excluding journalists from briefings’. The next section confirms empirically that property ‘experts’ from institutions like banks and the real estate industry were often interviewed by Irish journalists during the bubble years, with the result that their views dominated the news.”

In relation to post-boom coverage by the Irish Times, the Irish Independent, the Sunday Independent and RTÉ, Dr Mercille adds:

“The first point to emphasise is the clear discrepancy between coverage of the housing bubble before and after it burst. Before 2008, the media tended to largely ignore the growing property bubble and it is only months after it had burst that discussion of the subject became more prevalent. Once the housing market collapsed, the media simply could not ignore its downward trajectory, hence the increased coverage. This again reflected the views of political and economic elites, who eventually had to face reality, let alone because Ireland’s creditors would soon ask to be paid back.”

Fig1Fig2

“Figures 1 and 2 show the number of articles on the housing bubble that have appeared in newspapers by year.1 The methodology used to construct those graphs consisted in identifying articles that discussed the housing bubble in Ireland. The keywords used were ‘housing bubble’, ‘property bubble’ and ‘real estate bubble’. These terms were judged to be the most appropriate ones to assess media emphasis and neglect of the Irish housing bubble. Other terms such as ‘housing boom’ or ‘housing affordability’ would have returned articles on related subjects, but would not necessarily have denoted coverage of a housing bubble, which by definition refers to abnormally inflated housing prices. For example, the phrase ‘housing boom’ has positive connotations and was often used in the media before the crash to give overly optimistic assessments of the property market.

“Similarly, there have been news stories about corruption in the planning and political systems as related to housing, but those only rarely considered the fact that, at a macro level, the property market was in bubble territory. On average, the Irish Times had 5.5 times more articles on the bubble per year in 2008–11 than in 1996–2007. Similarly, the Irish Independent/Sunday Independent had on average 12.5 times more such articles in 2008–11 than in 1999–2007.3 Moreover, the few articles published during the earlier period often denied that there was a bubble. For example, Irish Times articles’ titles included: ‘Irish Property Market Has Strong Foundations’ (29 October 1999), ‘Study Refutes Any House Price “Bubble”’ (18 November 1999), ‘Bricks and Mortar Unlikely to Lose Their Value’ (11 December 2002), ‘Prices to Rise as Equilibrium is Miles Away’ (18 March 2004), ‘House Prices “Set for Soft Landing”’ (22 November 2005), ‘Property Market Unlikely to Collapse, Says Danske Chief’ (2 February 2006) and ‘House Prices Rising at Triple Last Year’s Rate’ (29 June 2006). The Irish Independent/Sunday Independent reveal the same pattern, with headlines such as: ‘NCB [Stockbrokers] Rejects House Value Threat from Burst Bubble’ (11 February 1999), ‘Property “Bubble” is Not Yet Ready to Burst’ (23 April 2003), ‘The Property Bubble Never Looked Like Bursting in County Roscommon’ (16 May 2003), ‘House Prices Not About to Fall Soon, Insist Auctioneers’ (1 June 2003), ‘Dire Predictions of Collapse in Value of Homes Dismissed’ (5 October 2003), ‘Price of Houses “Not Over-valued” Says New Report’ (19 December 2003), ‘There is no Property Bubble to Burst, Despite Doomsayers’ (27 June 2005), ‘Influx of Workers Gives Big Boost to Property’ (25 January 2006) and ‘Property “Bubble” Could Continue Expanding’ (10 February 2006).

“Of course, there were some articles warning about the bubble, such as David McWilliams’ (1998) piece and those by Morgan Kelly. However, such warnings were effectively drowned in a sea of articles either denying there was a bubble, remaining vague about it or simply talking about something else. For instance, between 2000 and 2007, the Irish Times published more than 40,000 articles about the economy – but only 78 were about the property bubble, or 0.2 per cent.4 This is small coverage for what was arguably the most important economic story during those years. Articles that cautioned against the possible negative repercussions of a real estate bubble were often met with stories throwing doubts on such claims or arguing that things would be fine. For example, in 2003, an Irish Times article dampened possible worries of an overvalued property market with a story entitled ‘IMF Points to “Significant Risk” of Overvaluation on House Prices; The Irish Property Market May Be in “Bubble Territory”. Or Then Again Maybe It’s Not. Even the IMF Can’t Make Up its Mind’.

“The media relied on so-called ‘experts’ from the financial or real estate industry to describe the market, which thus received almost invariably upbeat analysis. For example, as late as November 2007, the Irish Times conducted a survey among ‘property experts’ to predict how the market would evolve in 2008. The six experts selected all held high-level positions with property firms:
Managing Director, CBRE (global commercial real estate services firm)
Investments Director, Lisney (leading Irish real estate agency)
Managing Director, Savills HOK (global real estate services provider)
Managing Director, Sherry FitzGerald (leading Irish real estate agency)
Managing Director, Ballymore (Irish property company)
Chief Executive, IPUT (largest property trust in Ireland)
Director, Finnegan Menton (Irish property consultancy firm).”

“Not surprisingly, their forecast was enthusiastic. Their responses included statements such as: ‘We have an underlying economy which by any standards is good’; ‘The good times are not over’; ‘There is a lot of cash out there looking for safe homes in an economy that is continuing to grow’; with ‘capital values likely to bounce back during the course of the year, the timing is right to buy development land to catch the upswing for residential development’; ‘The broad macro economic fundamentals of the Irish economy are sound’; ‘we are in a cooling off period and not a collapse’; and ‘the commercial investment market will provide solid positive performance’.

“The views of experts were also used directly to discredit suggestions that the market was overheating. For example, an article entitled ‘Study Refutes Any House Price “Bubble”’ started with the following sentences: ‘There is no house price bubble, according to Mr Jim O’Leary, chief economist at Davy Stockbrokers. In the latest report on the housing market, Solid Foundations, Mr O’Leary said the market has been driven by fundamental factors and these would need to reverse for the market to collapse’.”

“The residential and commercial property sections and supplements also contributed articles and glossy pictures encouraging readers to get into the real estate market. Such articles described various properties on sale and were virtually indistinguishable from advertisements. For example, one entitled ‘There’s a Billion Reasons to Buy’ presented a new development of luxury apartments noting that the ‘extra spacious apartments feature quality designer kitchens with integrated AEG appliances and stone worktops; top notch bathrooms with ceramic tiles, heated towel rails and chrome fittings; recessed lighting and centralised heating’. It continued by assuring the reader that such a ‘high spec naturally positions this development at the upper end of Dublin’s residential market and it is set to become a benchmark for the capital’. Potential buyers should waste no time:
‘However you don’t have to be a millionaire to buy into such billion euro territory – 355,000 is all it takes to stake your claim. But numbers are strictly limited – you’d want to stake it fast’.”

“Journalists persisted in rejecting the view that the Irish property market had been in a bubble months after it started collapsing. A few examples have already been given above of articles published in mid to late 2007 still claiming that the housing sector would either continue to go up or that a soft landing was the worst that could be expected. Other similar stories appeared in 2008, such as the following: ‘The faint-hearted agonise over buying, hoping that prices will fall further. But don’t wait. Buy now, don’t listen to the doomsayers

“Television followed the same pattern as the print press. During the boom, RTÉ sustained the national obsession with houses by presenting programmes like House Hunters in the Sun, Showhouse, About the House and I’m an Adult, Get Me Out of Here.

…[RTE's] Prime Time…Between 2000 and 2007, had a total of 717 shows aired, according to RTÉ’s website. Of those, only 10, or about 1 per cent of the total, had a segment concerned with the housing boom. These presented a total of 26 guests or interviewees: 11 came from the property or financial sectors (banking, insurance or stockbrokers); four were politicians from Ireland’s establishment political parties (Fianna Fail, Fine Gael and Labour); four were journalists; four were academics or researchers; and three were economic consultants. With respect to their views on the housing boom, only two (David McWilliams and Morgan Kelly) stated clearly that there was indeed a bubble and that it would burst. The 24 others remained either vague or argued explicitly that the housing market was and would remain strong in the years to come, or that a soft landing was to be
expected if the boom decelerated at some point.

“For example, economic consultant Peter Bacon said that the ‘housing market is well underpinned by demographics’ (27 August 2003). Fianna Fail politician Sean Fleming declared that ‘definitely, the house market is going to be very strong in Ireland for the years to come’ because of ‘growing population’ and because ‘incomes are strong’ (12 April 2006). On the same show, Shane Daly (of real estate company Gunne New Homes) said that ‘people exaggerate often the level of debt that people are getting into’. A few months later, on 18 October 2006, Marian Finnegan (of real estate company Sherry Fitzgerald) said that ‘we are looking at a soft landing’. As late as 6 June 2007, Eunan King (of NCB Stockbrokers) stated that there won’t be a crash. It was only in April 2008 that Prime Time seemed to acknowledge as fact the sharp drop in housing prices.

“In April 2007, RTÉ aired a one-hour programme entitled Future Shock: Property Crash, which outlined some of the possible dangers of a drastic decrease in house prices. Even though it came several years after The Economist had clearly presented the fact that Ireland was in a housing bubble, it still generated vigorous counterattacks in the Irish media. Taoiseach (Prime Minister) Bertie Ahern denounced its maker, Richard Curran, as ‘irresponsible’ on the radio. The Construction Industry Federation, representing Ireland’s builders, said that the programme was politically motivated.

Cliodhna O’Donoghue, the Irish Independent’s property editor, wrote that: ‘Future Shock was very much a shock tactics programme and many within the property and construction industry have already labelled it irresponsible, partly inaccurate and wholly sensationalist…the programme still did much damage to market confidence’. Marc Coleman asked, ‘why does RTÉ want to run down our economy?’ by presenting the programme by Curran, who is a ‘careless talker’. It is true that the programme offered a more critical perspective than much of the previous news coverage. However, when one considers that it aired just as the housing bubble started deflating, it cannot be taken as an example of a media that offered clear warnings of a bubble that had been growing for over a decade.”

Dr Mercille concludes:

“The overall argument is that the Irish media are part and parcel of the political and corporate establishment, and as such the news they convey tend to reflect those sectors’ interests and views. In particular, the Celtic Tiger years involved the financialisation of the economy and a large property bubble, all of it wrapped in an implicit neoliberal ideology. The media, embedded within this particular political economy and itself a constitutive element of it, thus mostly presented stories sustaining it. In particular, news organisations acquired direct stakes in an inflated real estate market by purchasing property websites and receiving vital advertising revenue from the real estate sector. Moreover, a number of their board members were current or former high officials in the finance industry and government, including banks deeply involved in the bubble’s expansion.”

 

Julien Mercille is a lecturer in US foreign policy at UCD, where he moved after obtaining his PhD from UCLA. He teaches on US history and foreign policy and has published academic articles on Iran, Iraq and the Cold War, and is now researching the “War on Drugs” and Afghanistan.

 

Previously: The Why

Pics: UCD/ David McWilliams, Jonas Fredwall Karlsso (Vanity Fair)

51 thoughts on “For Those Who Shouted Stop, He Salutes You

    1. Crikey Mikey

      Good article for a visiting Martian maybe, but absolutely nothing that hasn’t been blind obvious to everyone who lives in Ireland since 2007. Mark Colman, Brendan O Connor… booooo. David Mc Williams, Morgan Kelly…yaaaaay. Next he’ll be telling us that eating appears to cure hunger.

      1. Joe

        The day you get published and photographed in Hogans, is the day I’ll agree with you. Until then I’m ignoring you, starting after this post.

        1. dylad

          Indo is still pushing property stories, stating rubbish about rates of price decline slowing and trying to induce a new frenzy. I is not suprising they are up to their necks in this. Should take a class action against irish media inc.

      2. evil_g

        All truths go through three stages. First they are ridiculed, then they are vigorously opposed, finally they are accepted as self evident.

      3. TonyS

        Agreed, but it’s important that an academic study was done on this and a paper published … it will be used as a serious reference point in the years ahead when we are all gone …

  1. Jockstrap

    “of what makes the Irish media tick’”

    Left out a ‘h’ there.

    The more people realise how our media is controlled by vested interests, the better. News used to be just news. Now it’s ‘opinion’ and spin doctoring and PR releases put through a thesaurus.

    1. Derval

      I think you are mistaken.
      News was always spin doctoring to control the masses and manufacture consent.

  2. Small Wonder

    I still don’t understand why people were letting the media tell them to buy a house. Would you not base that kind of decision on your own personal circumstances – income, desire to settle down/become mortgaged up to the eyeballs, etc…?

    1. Jockstrap

      It was a perpetuated culture by vested interests. People were lied to, misled, told they were nothing unless they had property. Smart people borrowed within their means. But banks were also lending far too much to people who couldn’t afford it, even if the property prices kept rising.

      Also, people need housing and many had little choice but to buy a house which was overpriced. This was particularly the case for young families.

      The bottom line is the government was complicit in all of this and they managed it very badly with poor oversight and almost no regulation of lenders. They didn’t serve the citizens and the best interest of the nation. That’s their job.

      It should not have happened.

      1. cluster

        It is true that it is not always easy but this concept (generally expressed rather than you really) that people had no choice and that personal responsibility is irrelevant is infuriating.

        Of course the civil service/govt./media/regulators should have been many orders of magnitude better but where was the demand for this from the people. Where was the sense that buying a house from plans in the middle of nowhere (within commuting distance of Dublin) on terms which relied on never fair winds and luck was an incredible risk to be taking?

        1. Derval

          If it is cheaper to buy a property than to rent it – doesn’t it make sense to buy it?
          It’s stupid to rent in those circumstances.

          If we had a situation, like in USA, where – when the property is repossessed, your debt is abolished – that would be good.

          But in our situation, why would anyone let their property be repossessed if they still have to pay the debt?
          Move out, rent the house to tenants and let that pay the mortgage.

          Ok, if you can’t get tenants, that’s a problem.

          But you still have to pay rent somewhere so why not keep your property and at least keep paying something towards the mortgage?

          Am I missing something?

          1. cluster

            It is only stupid to rent in those circumstances if you are sure that you will be able to maintain your current level of income and costs for the next 20 years no matter what happens.

            Would a pay cut or half a year unemployment or a major sickness or the arrival of kids push you over the brink? Then, it is not stupid to rent.

          2. Derval

            Nobody is completely certain of those things.
            So what are we supposed to do, never take the risk?
            Pay rent for our entire lives?
            When we reach retirement and we still have to pay rent – a significant portion of that rent is probably going to have to come from the taxpayer.

          3. cluster

            Derval, Ireland is not the first place to have a property bubble and it will not be the last.

            You should be comfortably able to pay your mortgage rather than stretching (I know you will often hear the exact opposite advice) and you should have a buffer.

            You should take

          4. cluster

            You should take a look at standard metrics for house prices against economic fundamentals and see how current prices are shaping up.

            Considering we have a real culture of using our homes as investments, it is mind boggling how little research or expertise most people put into it.

    2. beego

      It takes a lot of courage to be an outlier. Most people want to do what their friends and peers are doing, and for a long time it was all about buying property, due to media brain-washing. I remember ca. 2003 one conversation at a party being abruptly ended when I revealed I was merely renting. The word Loser was brandished about a lot then, doesn’t hold quite the same currency today. People are a bit more careful about who they refer to as Losers.

      1. TonyS

        I remember going into a bank on late 2006 and being practically begged to take a mortgage. I knew then that something was up and that the banks were trying to maximise their exposure thus making themselves ‘too big to fail’.

        They – above all – understand the adage that “if you owe someone $100 it’s your problem, if you owe them $1 million, it’s their problem” They simply extended that logic to themselves and the Irish state … thus we got the bank guarantee …

        It seems as if the Irish banks did exactly the same thing in the 20s, but then it was land instead of houses, and the subsequent collapse in land prices, which bankrupted a generation, was also blamed on ‘external forces’

        1. cluster

          Bankers everywhere, throughout history behave like this in cycles. The real scandal is the lack of governance and regulation.

  3. dublinentendre

    When you visit the Irish Times website guess what is the first word you see? above even the logo……yep……PROPERTY.

    I think it is more that the lending antics that were going on in the commercial sector fed into the residential. It is these early commercial antics by developers and banks that were not being reported.

  4. Freddie

    Property wasn’t in a bubble that was in run away mode in 1998, when McWilliams first warned about it. Property prices were being driven by the first Celtic Tiger which was based on manufacturing and services.

    The property bubble only kicked off proper in 2003/4, when Ireland should have been hit by a hard recession, but the policies of the time drove the economy to construction for growth.

      1. D

        Well he was right if you take the view he’s saying the seeds for a bubble are being sown. He’s horribly wrong if you take the view he’s saying 1998 prices were in a bubble. I think it’s revisionism to say the former because at the time everyone would have taken what he was saying to be the latter.

        1. coco pops

          “entering asset-price bubble territory”
          is what he said.
          So I agree McWilliams is saying the latter. I don’t think it’s horribly wrong. If you take a look at the graph in the dublin opinion blog link I pasted earlier, in 1998 the house price had already been at 45 degrees for 2 years compared to the industrial wage that remained relatively flat.

          So a credit fuelled bubble for two years already by 1998, unless you disagree? If you disagree I’d like to know on what basis.

  5. cluster

    Have a look at the property supplements that came with any newspaper you bought over the last week.

    Read through the pieces and tell me honestly that anything has changed. They are replete with references to ‘trophy homes’, ‘classy refurbishments’, etc.

    1. Dza

      “The beauty of guaranteeing deposits is that you use no money – not a penny. Instead, the government is using its sovereign credit as the country with Europe’s lowest debt/GDP level to restore confidence in the system. The civil service view appears to be that such a guarantee would subject Ireland to the risk that people withdraw money, disbelieving the state.
      But this would not happen. Some €350 billion of the total €500 billion is held by Irish people, so we won’t move our cash. In addition, the €150 billion owned by foreigners would simply become like an Irish government paper.
      The Irish bond market has never been in such demand, and so would this guarantee scheme.”

      http://www.davidmcwilliams.ie/2008/09/28/state-guarantees-can-avert-depression#comments

      1. TonyS

        Of course he got some things wrong, but he has been a fairly astute observer of the Irish economy and its impact on society, right back to ‘The Pope’s Children’. He’s always worth reading, in my view, and you can say that about many Irish commentators …

        1. Dza

          I agree, he’s very popular and the little titles he gives people in their little buckets, such as “Panasonic Pat” are a laugh riot. But this ‘some thing wrong’ was the biggest mistake this country ever did. Leaving Ireland bankrupt (before we had the lowest debt/GDP ratio in Europe) and people reeling for years to come. He was very influential back then because he got it right abut the property bubble, I believe the late Brian Lenihan came to visit him shortly before the guarantee too, if memory seves me right.

        1. Dza

          Nothing about the Swedish model in his original article, and blaming people for not doing their homework in 2011! Ha, he should have looked at the sums himself before the 2008 article.

          “We need to come up with an Irish solution to our specific problem – because no one has the antidote to the contagion that is spreading through the global financial markets.”

          “The only option is to guarantee 100 per cent of all depositors/creditors in the Irish banking system. This guarantee does not extend to shareholders who will have to live with the losses they have suffered. However, it applies to everyone else.”

    2. tygraachus

      Perhaps if he had been listened to in 1998, the situation that led to the bank guarantee in 2008 might not have arisen….

      1. cluster

        This, he was very wrong about the guarantee but there was no painless, easy option in our circumstances.

        Much smarter not to leave yourself in the sh!t than to try (and fail) to devise ingenious ways to extract yourself from the sh!t.

  6. What Goes Up...

    The media did the job it was supposed to do – sell advertising space.

    Expecting it to do anything else is to buy into the false story the media tell of itself – that it speaks truth to power.

    It doesn’t.

    A salutary tale of the nexus of media and property vested interests during the bubble in Ireland is perfectly encapsulated here:
    Market is alive and kicking, says auctioneer MacDonald
    http://www.thepropertypin.com/viewtopic.php?t=4338

    A puff piece, a discussion on it, a pithy observation, a journalist picks up on it, writes an article about it and loses his job.

    And his fellow journalists – in reaction to this do what?

    They ignore it and pretend it didn’t happen!

    The media isn’t the fourth estate – it’s a ghost estate.

  7. Tickle (Now with 100% pre-moderated comments!)

    Good piece but I can’t understand how anyone (well you know what I mean) would be surprised that certain papers etc printed what they did, to suit themselves. They are not inanimate objects with self awareness that churn out articles.. They are the vocal pieces of people. Little humans.

    All media is by default tainted with agendas. Even broadsheet has succumbed to it.

    You can’t fight against being human. Regardless if you think your intentions are the “good” ones.

    1. Chompsky

      Thanks, Django. We felt Sunday afternoon might suit the longer read. If no one objects we’d happy to repost it today (Monday)?

  8. Noel

    A couple of points I’d like to make…

    1, If the last 20 years has thought us anything it’s that the professionals who we previously revered, or at least respected, were either idiots or thieves, in the latter case I would cite Enron and their accounting accomplices, and to the former, I would contend that the majority of so called experts are nothing of the sort, you might get one bright spark but the rest of his professional colleagues are sheep who follow the Messiah’s lead

    2. One of the most dangerous phrases in the English language is “self fulfilling prophecy”, this has caused so much unnecessary additional damage that it should be banned from the lexicon herewith. With this ridiculous phrase you are no long allowed call a spade a spade for fear that people will no longer buy spades!!! Fianna Fáil and the assorted professions listed in this article perfected the catastrophic use of this phrase by refusing any naysayers the oxygen of publicity or reasonable debate while Bertie et al went further and suggested that such naysayers should remove themselves from this life. The fact is that if someone is wrong the right thing to do is to say it is wrong (even if the speaker is admitting that he previously was wrong), Simply saying things will be fine will not make them fine!! You have to look at the evidence and if you see a fall coming you have to say it…

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