Mercille On Monday


t4_-371666110-226x300Michael Noonan (top) and Julien Mercille

Why is Michael Noonan courting property developers and vulture fund managers?

Has he learned nothing?

Julien Mercille write:

Our Minister of Finance, Michael Noonan, is cosying up again to the same developers and banks who crashed the country. A few days ago he met with them to explore ways of financing new construction.

Celtic Tiger developers Johnny Ronan and Michael O’Flynn and others were present at the “low-key”, “behind-closed-doors” meeting in the luxury Marker Hotel in Dublin’s Dockland. They said it’s “good to see” the key players in construction in the “same room again”.

The Irish Independent conveyed Noonan’s thoughts without challenge with the headline “It’s Time for us to Stop Scapegoating Property Developers—Noonan”. A tough press challenging the government indeed.

The Sunday Times went further and backed the strategy while defending the developers. The editors were explicit: “It’s Time to Bring Developers in from the Cold”, they said. They stated that Noonan’s comments about scapegoating were “right on the money”. Then followed a pathetic defense of those directly responsible for the crisis as the editors asserted that:

-Since the crash, “much time and energy has been expended in scapegoating” bankers, developers and politicians, which is harsh because “most of the culprits have been punished in one way or another”.

-And “if we keep obsessing about the mistakes and injustices of the past we are in danger of losing the capacity to move forward”, and that’s why “Noonan’s comments make perfect sense”.

-If we don’t bring developers back, we won’t be able to build the houses we need because those developers “have experience of dealing with the myriad issues involved in turning an empty field into family homes”.

-We shouldn’t forget that the only thing most developers did “was borrow too much money from banks”, something we all did anyway because we were all partying.

Oh wow. Reality turned on its head.

In fact, bankers and developers haven’t been scapegoated at all, otherwise they’d be in jail or would have been forced to do community work for years to compensate for the mess they’ve caused. Second, if we forget about the mistakes of the past, well, we’ll make them again.

Third, the way to build the social housing units needed is to involve the government more in this task, not discredited developers. Rory Hearne provides a lot of progressive ways on how this could be done here.

Last, we didn’t all party. The truth is that a small minority of VIP’s partied, and everybody else then cleaned up their mess.

Indeed, good reporting from yesterday’s Sunday Business Post revealed that in 2008, a mere 22 Celtic Tiger developers were responsible for a staggering €26 billion of debts to banks. Compare that to the €64 billion that taxpayers injected in banks to recapitalize them.

Michael O’Flynn had total borrowings of €1.8 billion primarily owed to Anglo Irish. Johnny Ronan was one of the “most ambitious developers of the boom” and owed €1.6 billion mostly to Anglo Irish. Denis O’Brien owed €1 billion primarily to Anglo Irish. Bernard McNamara owed €1.7 billion, mostly to Anglo Irish. Sean Quinn owed €2.9 billion, almost all of it, you guessed it, to Anglo Irish.

But Noonan has been meeting up with other characters as well: foreign vulture funds, many from the United States, that have been buying up Irish property by the ton.

Again, the Sunday Business Post has done very good reporting on this, with journalists Ian Kehoe, Emma Kennedy and Roisin Burke in particular spelling it out as it should be in articles entitled “Who Owns Ireland and Who Wants to Buy it”, “Vulture Funds Turn Screw on Apartment Renters” and “Why Vulnerable Mortgage Holders Are in the Line of Fire”.

They show how foreign interests are capturing large chunks of the country’s stock of property, and warn that they are most likely to leave in the short term, once the assets have gone up in value, at which point they’ll sell them back to… Irish people.

This highlights an important point about the mass media. Of course, there’s a lot of regurgitation of government propaganda.

You can find that in editorials, opinion and news sections. Uncritical reporting is definitely one way to make a long and rewarding career in Irish journalism. If you establish good contacts with influential politicians and report descriptively on whatever they say with no questions asked, you’ll get a secure job. If you defend them when they’re attacked, you’ll be praised beyond retirement.

But there’s also excellent information in the press. The reason is that the business press caters to, well, business people, and decision makers. Those people need good information, otherwise it would be hard for them to make any decisions. So there is good analysis in the business press, albeit presented from the point of view of someone in business. It’s also often buried in the back pages, but it’s there.

@JulienMercille is lecturer at UCD and the author of The Political Economy and Media Coverage of the European Economic Crisis: The Case of Ireland. He will provide evidence to the Banking Inquiry later this month on the role of the media during the housing bubble years.

36 thoughts on “Mercille On Monday

  1. JanB

    And those damned fairies coming along after and putting pyrite into foundations and pulling out the firebreaks on all these perfectly constructed pieces of art that these fine developer men had broken their backs building

  2. SweetPeteato

    I don’t think “developers” are demonised, just the specific developers who still appear to maintain a pretty cushy standard of living even after losing a billion euro gamble. That kind of ticks me off. But what gets me over-boiled is when these party boys get a sit down with my Noo Noo.

  3. Drogg

    Scape goating developers don’t make me puke. Noonan is as slimy as they come he is a master of backroom deals and would have been well in place in one of berties governments, the sooner this government topples the better cause its business as usual and people like that scum sleaze bag johnny ronan should be dragged through the streets and made an example of cause he is just taking the piss out of us all now.

  4. Bluebeard

    There’s only so many ways you can make ze same point Julien. Careful now or you’ll believe your own hype.

  5. TheMightyOne

    it does leave a nasty taste but on the other hand, the lack of construction in the capital is reaching crisis so at least the gov are conscious of it

    1. gertrude

      150k of 750k mortgages in arrears. 20%. Lack of construction or lack of repossessions? Also, how many residential properties to banks currently own, if NAMA owns very few?

    2. Small Wonder

      It’s rather convenient for bankers and developers if construction is low. Oh who will come and save us? How much money do you want? Don’t worry about quality. Just get it built. I’m *desperate* for a house!

      1. Nikkeboentje

        The profit margins are too low for any developer to build new houses at the moment. Due to the cap on the LTV for mortgages, house prices are not expect to increase anytime soon, so no incentive for developers to build new houses.

        1. Small Wonder

          It’s convenient for bankers that people feel they are being denied a house by restrictions on mortgage lenders. Oh who will save us from this inability we have to buy a house? How much money can I borrow? Don’t worry about the terms. I’m *desperate* for a house!

          1. Rob_G

            Do you have anything substantive to argue against what Nikkeboentje is saying? Presumably the greedy developers wouldn’t be the type to leave money on the table?
            Do you have any suggestions yourself as to how the housing shortfall in Dublin can be met?

          2. CousinJack

            There is a solution, for which house price vs construction cost is irrelevant – SOCIAL HOUSING bult by local authorities like it always fing was

    3. aretheymyfeet

      and that’s why Mercille say the government should be stepping up State building (perhaps the EU investment fund we were supposed to get a piece of), not the very same bankers and developers who created the mess to begin with. Nothing has changed in this country to prevent the same carnage occurring again. In fact, it is very much so back to business for many.

  6. Nikkeboentje

    “They show how foreign interests are capturing large chunks of the country’s stock of property, and warn that they are most likely to leave in the short term”
    The foreign investors will be here for at least another 5 years. When they bought the properties in order to avail of a Capital Gains tax break, they have to hold the properties for at least 7 years. Also a lot of them are “income” funds and as long as rents are rising in Ireland, they will stay here.

  7. JunkFace

    Most Irish built homes from the last 30 years are of such a poor standard, cheap materials, illegal room sizes, cheap insulation. There’s shortcuts everywhere, and regulations are flaunted repeatedly. Are they going to actually employ competent, non corruptible Building standards regulators, who will actually do their job?

    Probably not

  8. Truth in the News

    We need to estabish a State Building Agency with CPO powers to
    aquire land for the common good and build houses for those that
    need housing, we must never allow again a group of well connected
    developers to get a stranglehold on housing stock, their cheer leaders
    are the Banks, Legal Profession, Auctioneers and most of all those
    who own Newspapers and its from their organs the hype is generated
    and well renumerated.for
    Then we have Irish Water holding a consulatation on providing water
    to the Greater Dublin Region from the Shannon which will cost a Billion
    while they waste 50% of the present supply in leaks, in addition the ESB
    are to be compensated for the loss of this water from the Shannon Hydro
    Station to the tune of 400 Million over 10 years, they currently are given
    compensation for the water that is taken from the Liffey….10 M maybe
    more….it can only happen in Ireland, little wonder when you have the likes
    of Noonan consorting with the likes of them.

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