The Telegraph snipes at Ireland and its economy as usual

The following is posted by grumpylarry in the Telegraph

“The Irish it would appear are not as well served by the EMU as they would have us believe. Or could it be that they don't understand money and finance quite as well as they think. In my last blog I highlighted the problems some of their east European labour was suffering due to the downturn in the Irish economy. It would appear that the many of the 'New Irish' now find themselves broke, unable to speak the language, depending on charity to eat, struggling to keep a roof over their head or homeless, and too ashamed to go home. They may well be joined by the native inhabitants of the emerald isle, and this time they wont have the wicked British to blame…”

It is accompanied by a picture from the late 1800s or early 1900s which gives an image of abject poverty. The picture has the caption ”YOU CAN'T BLAME US THIS TIME.” The gloating is based on ignorance.

The Telegraph has never got over the fact that we are an independent people since 1921/22. Of course there are serious problems in the Irish property market. I have documented them from time to time. Nevertheless there is not a scintilla of evidence to suggest that Anglo Irish Bank, AIB or Bank of Ireland face collapse. These banks are robust and quite profitable.

It is a bit rich to listen from lectures from the UK on Irish problems.

Has not grumpylarry heard about Northern Rock, the UK bank that got a £25bn bailout from the British government recently?
Has he forgotten the Lawson boom/bust?

Ireland-Construction Downturn

There is increasing evidence of a downturn in the building industry. House prices are overvalued by about 20% . Some optimists forecast that the moderate fall in house prices would have run its course by early 2008. It is more likely that the correction underway will continue for some time. The spectre of negative equity looms for some.
There are several reasons for the decline in house building:

• The 2% rise in interest rates has impacted strongly on repayments.
• Many builders were over optimistic in their assumptions in relation to future demand. They are now left with unsold houses.
• There has been an unsustainable rise in house price inflation.
• The Government takes 30%-40% of the cost of a new house in tax.
• The Stamp Duty issue has not been resolved.
• Unemployment has begun to rise.

There is a tendency to scapegoat economists -like David McWilliams- who have forecast choppy waters ahead. Some have gone so far as to blame them for the fall in house prices. This is of course nonsensical.

There are indications that on average builders have up to 10 new houses unsold in some parts of Ireland. In 2008 a more conservative approach will be adopted. Forecasts for 2008 vary widely.It is likely that new house starts will drop from 90,000 to 60,000 in 2008. There is a danger that it could drop to 50,000 as builders must first off load large numbers of unsold houses.

The growth rate for the economy will drop to 3.5%-This is the benign scenario. Government cutbacks rising oil prices and a housing crisis could drag the rate down to 1% or less.