Irish Debt Crisis (1 Viewer)

It used to be by comparison a poor EU country , but became the Celtic tiger. Then as here and the US the banks buggered it up.

I did read in the paper last week , the story supposedly of some homeless guy in Dublin, who used to work as a security guard, on around 35k a year.

Now in the UK thats supposed to be a really lowly paid job - and 35k would take you above average pay here however its measured.

I don't have the answer but I do think something is wrong when Inflation becomes a normal expectation. Of Govts as well as people.

When there is no inflation, a Govt believes it must act. Why? what is wrong with no inflation?

There was a time, long ago, when you could Save for something.
You could save for a house deposit and that was expected to be 20% or there about.

In the last 30 years, how could an average income earner save for a house?
You couldn't as the price increased faster then your savings and everyone thought that was great.

You then were offered up to 105% of the property value as a loan in order to get on the Merry Go Round.
105% covered the purchase fees so effectively you didn't have to save anything.

This made the situation even worse in that the market had more buyers then ever and as it wasn't their money (so to speak) they didn't have to look for bargains but paid what ever the seller wanted, which was always more then they would have expected a month ago.

And everyone thought it would never end. ( It still hasn't)

While house prices were going up by 10 to 15% pa Govt's still reported inflation at 2 to 3%.
Now how can that be? They must have not counted the cost of a home as part of inflation.
But surely the cost of shelter is one of the most important parts of your families outgoings and to not have this including in Inflation Figures doesn't make sence.

If over 20 years the cost of a home went from 150,000 to 500,000 surely that would put up the Cost Of living??

So you don't buy, you rent.
But the landlord still wanted the same return for his 500,000 home as he did for his 150,000 purchase so rents spiraled but again we are told inflation is under control at 3%.

One sector did help to keep inflation down and that is the "Luxury" sector. Colour TV's, Computer games, cars.
The more we spent on these items, more we kept inflation rates down.

But, a new 42" plasma TV for the bedroom doesn't really help us in the long run (may depend on what DVD's we watch) and where did a lot of these Gadgets come from? China.

We made China prosper and now these prosperous people are using that money to buy our food and putting prices up but so long as buy as many of their TV's as they buy our food then maybe we will keep inflation down.
problem here is they have a little more mouths to feed then we have rooms to put TV's in.

Meanwhile, Home prices kept climbing and this item became, instead of the Family Home, virtually the only Family Asset.
Govt started to realise what had happened but to stop the merry go round, a lot of voters would suddenly not be rich anymore but be heavy in debt. So they did nothing.

When the %$&* hit the punker the banks, by default, would have stopped the game but the Govts stepped in to prop them up and avoid the voters facing reality.

Until we realise a Family Home isn't a wealth asset. it is a health and safety asset but not a wealth asset.

Our grand parents would never have been able to or wanted to borrow on their house to buy a boat, car or go on a holiday but we do.

Another problem with our Homes increasing in value is our rates sky rocket.

Councils suddenly had more money and employed people to do things with it.
"Sydney Opera House' projects were going up all over the place and often with borrowed money.
The council then needed to put the rates up to cover the spending and repayments.

We now face a situation where our wealth is in the family home. Our rates have skyrocketed. Insurance costs are up and we are planning retirement.

Our family home does not produce one cent of income to cover any of these costs and our retirement fund has just been slashed by the global debt problem so how can we even pay our rates let alone enjoy our retirement??

In NZ we live in a little sea side town and some houses there are paying 10,000 per annum in rates.
For what??

The council is building a new foot bridge and selected the highest price because it looked the best.
They agreed to pay 5,000 to have a bus painted with a mural so it advertised the place.

Population is 4,000 and the bridge is going to cost 25 mil ???

Sorry for the long post but something is wrong.

PNGBill,
That is about as clear an analysis as I have read concerning the cause of the crisis we are facing. Bravo! Now the question is, how do we fix the mess without making it worse?

Wish I knew but I am sure one way or the other, it will be "fixed" as so far, nearly every act a Govt has done has been to shield the voters from reality and to do this they have either squandered years of savings (Australia) or got the people deeper into debt.

Imagine a family is planning their annual vacation and the income earner comes home with the news the family income has just been reduced by 30%.

The families reaction to this is not to rethink their vacation but to borrow on the net asset of their home and go on an expensive holiday to take their mind off the problem.

This effectively is what Govts have done.

They see that to keep doing what we have been doing will get us out of the &%#^.

Australia has been building school facilities whether the school needed it or not.
There are examples of recent improvements being pulled down just so some tax payers money can be spent - to save the country.

In the Great Depression, New Zealand gathered a lot of unemployed people and sent them to remote areas to plant trees.
This gave them a Purpose and an income and importantly those trees became the foundation for a world class sustainable forest industry that has been a consistent employer and export earner for 60 years or more.

What are Govts doing this time around?
Giving money away for people to spend. truly. Australia's prime minister told the people to Spend the millions he posted to them.
A lot of Govt Projects have been decoration like school buildings the school didn't need.

We pay unemployment benefit to young people to live in remote communities (often near surf beaches) where there is no work yet we must look overseas for workers in our cities? how is this sustainable.

Where is our modern Hoover Dam ?? That project is still a worthwhile asset to it's tax payers.