This page contains a single entry from the blog posted on December 8, 2010 6:43 AM. The previous post in this blog was The spirit dance was unfolding. The next post in this blog is Some Portland research, with a grim conclusion. Many more can be found on the main index page or by looking through the archives.

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Wednesday, December 8, 2010

When Irish eyes are crying

Sure, it's like a morn in Portland:

Over the past five years, the Irish government became enamored with property. Developers were given tax breaks, and banks were encouraged to hand out loans worth 100 percent of the price tag. Construction took over all other industries to become Ireland's number-one earner....

Because prices were going up, people always felt that building a house to sell on was, in a sense, a one-way bet, it meant then that houses were built all over the country, very, very often in places where employment prospects were essentially zero. So, again, this was just a disaster waiting to happen.

Here in America, we call this "urban renewal."

Comments (7)

Not only were they giving out 100% mortgages to people, bank of Scotland moved in and gave 120% to people who couldn't even pay a down payment.

Add to the fact that we were paying our builders 20-50 euro a hour which was most lightly drank in a pub it was only a matter of time before things went belly up.

The main lesson here is Ireland was the darling example of the economic miracle until they got in bed with developers and ruined their country's economy.

Or "smart growth."

I think you will find that most of the speculative houses that were built during this low-interest clusterf*&%k are suburban and beyond. Think Happy Valley and Tualatin. The absolute opposite of smart growth or urban renewal. OK, carry on as always.

Sherwood: Have you heard of the South Waterfront Projects?

Meanwhile, from the UK Guardian:
"Iceland's decision two years ago to force bondholders to pay for the banking system's collapse appeared to pay off after official figures showed the country exited recession in the third quarter.

The Icelandic economy, which contracted for seven consecutive quarters until the summer, grew by 1.2% in the three months to the end of September.

Iceland famously agreed in a referendum to reject a scheme to repay most of its debts that were once worth 11 times its total national income.

In contrast to Ireland, Iceland's taxpayers refused to foot the bill for the debts accumulated by the banking sector. Bondholders were told to accept dramatic reductions in the value of repayments on bank debt after the sector borrowed beyond its means to fund ambitious investments abroad."

Bill, that's what got me, too. Irish taxpayers were told "We have no choice but to subsidize the bailout, because what happens if other countries won't offer us credit?" Well, the same greedheads who caused this mess won't have any incentive not to do it again, among other things. Iceland won't have this problem for a long while, because the greedheads learned that they might actually lose out on their money if they try it again.

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