The Recession

[Armaghtothebone]

Over the last few weeks I've sensed a wee touch more optimism among the builders and developers I deal with (Armagh/Down/Antrim). At least one bank is doing 95% mortgages.Hard to get and many small print hoops to jump through.but at least they're there.

Part of the problem in my view is eejits from the banks/universities/brokers etc saying that they think prices have another 10% to fall.If they really believe that why tell everyone?
 

[mackers]

I know that the "talking ourselves into a recession" theory only goes so far, but the boring economics student in me got madder and madder listening to Matt Cooper and the like. For a guy who is a business journalist he didn't seem to know the definition of a recession. It's negative GDP growth for a number of consecutive quarters (think it's three or four) he was talking about the country being in recession because economic growth had slowed to 2 or 3% a few months back.
As for Eddie Hobbs, don't get me started.......some of the listeners texted into the Last Word today asking him about the failed property fund that he advertised on TV and he waffled his way out of it. He can't have it both ways, being a pioneer for the consumer against poor financial advice and then lift a big fat fee from an investment company for recommending a donkey fund.

[Bogball XV]

Contractors are constantly having their contracts terminated and these jobs are not announced on the radio.  We have approx 250 of them on site at the minute, with 20 having lost their contracts in recent months.  From bringing on new staff last year we have cut staff, cut production and had a headcount freeze.  That is nothing o do with us "talking ourselves into a recession", it has everything to do with the increasing cost of running a business.

Precisely, as most of us know, a huge number of workers in construction are subbies of one sort or another, they're seeing contracts not being renewed right, left and centre, but when the 'self' employed lose their jobs, it's not announced, even worse, these 'self' employed people are not eligible to sign on the dole, so the economy cannot pick up on these people at all.  The first we'll hear about it is when the income tax take for 2008 is drastically reduced.

[Rossfan]

I'm surprised the sh1t didnt hit the fan earlier.
Agriculture has been fcuked since the turn of the Century, Manufacturing is all but closed down,Tourism apart from English Stag weekends has priced itself out of business so apart from US multi nationals selling to Europe basing themselves here because of low Profit taxes and that we speak English - we as a country have no ways of earning money anymore.
We kept an artificial house building boom going by borrowing cheap German money and selling totally overpriced houses to each other and thought we were wonderful.
Of course the fact that most builders/developers make contributions to FF and most Politicians seem to be Estate agents......
Now that we need consumer spending to help us through - what do we find -- the consumers have no money because all their cash is being used to pay mortgages on hyper inflated houses which will soon stsrt  to find their real levels.
Near me there's a backwater village ( I wont name it) where they built an estate of houses and were asking €250,000 for them. I think they'll be glad to get €100k soon.
Back in 1996 my brother bought a bungalow and 2 acres there for £42,000 ( about €55k). He is a teacher and his gross pay now is twice what it was in 1996.

[The Real Laoislad]

Plumbers, painters, gardeners, builders...they're all under the cosh. People simply cannot afford the work to be done at home and the price of materials leaves the above tradesmen in the lurch. We're all doomed. Except for me.

I wouldn't entirely agree with that,I find there is a ever increasing amount of small extensions,attic conversions,new kitchens,bathrooms etc being done now,All these projects that people couldn't afford to get done a few years ago because tradesmen could charge what they wanted.Now we see more competitiveness in the market,prices are coming down and people are seeing this as the time to get the work in their house done before things take off again

You seem to be trying to convince yourself that you won't be effected. Fair enough but putting on extensions now or building from scratch is bugger all cheaper now than 3 or 4 years ago cos while labour costs have dropped, it has been more than made up for the  increase in the price of materials.

I'm not trying to convince myself of anything,I'm only talking from my experience and what is happening in my business..I have plenty of work on at the moment and have work coming up for the next 4 months,..I made a conscious decision when i started out that i wasn't going to get too big..Employ 1 maybe 2 fellas thats it..
I have seen lads start out on there own,get a few big contracts,hire 10 lads,buy big jeeps and now when everything goes belly up they are letting lads go,they have massive bills in the wholesalers,no work and loads of hire purchase loans..I had offers of work from large contractors.One such company offered me 24 houses to wire in a development,6 houses were built,none were sold and the contract is now on hold..Where would i be if i had taken that job,Up shit creek without a paddle thats where.I know I'm going on a but but basically my point is,Subbies got greedy,They took on more than they could handle instead of sharing it out,Now they have money ploughed into contracts that won't be finished,I decided to stay small,I still have work and have more work coming in
I'm making enough to pay myself a decent wage and i have another fella 3 days a week,Its not as all doom and gloom as people are saying,Its just those who got too big too quickly are now taking a hit,Or as the saying goes the bigger the are the harder they fall

[ONeill]

You're still kidding yourself.

Listen, on the QT, I can start up a fund for you. Maybe a dinner dance here, an auction there. Don't worry, we'll see you good.

[Pangurban]

Every Cloud has a silver lining, we are now seeing the arrogance being knocked out of a lot of people, with the real hard knocks still to come. Real economics are a great cure for the delusions of wealth.

[lynchbhoy]

Worst of all though, Eddie Hobbs is on the radio talking about it. Its only since he landed on the TV that the economy has taken a downturn. I say Lynch him!!

I was listening to him after I listened to Hookie on Newstalk.  they are all saying the same thing and the sooner people get it into their head that we have hit the "wall" in marathon terms the better.  People who quote"we are talking ourselves into recession" seem to disregard the reality that is hitiing the world as a whole.  Do you think the Banks in the States are listening to David McWilliam?  Catch a grip people.  I work for a large MNC.  At the start of last year we brought on 25 new full time operators as business was going so well, this was the first recruitment of operators in 5 years.  4 months ago we announced nearly 4000 job cuts worldwide, with 40 people in Ireland losing their jobs.  Contractors are constantly having their contracts terminated and these jobs are not announced on the radio.  We have approx 250 of them on site at the minute, with 20 having lost their contracts in recent months.  From bringing on new staff last year we have cut staff, cut production and had a headcount freeze.  That is nothing o do with us "talking ourselves into a recession", it has everything to do with the increasing cost of running a business.

for your particular branch of industry BC it is very v competitive, with the unbranded companies snipping at your heels all the time, too much money is spent by yours and similar companies on R&D (you have to though) and the profit margins are decnet IF the product works, but you only have a short uncontested lifespan, which imo makes your industry unique.
More and more people are going for unbranded stuff and your company and many like it are always on the losing end. I worked for a similar MNC who have a manuf/prod plant in cork a few years back - in their dublin HQ.

I'll have to admit I will keep saying we are talking ourselves into a recession as I have seen this happen a few times before.
This is possibly the toughest one yet, but I still think we have enough money and local economy for self sustainability.

If we get a lot more blows below the water line, then I may change that view, but have seen nothing concrete yet to make me believe we are currently sunk.

[lynchbhoy]

Nah LB, we seriously are fcuked this time - I can't see any way out of it, as jobs are lost, so more jobs have to be lost, that's just the way it is.  Each lost job causes at least one more job to be lost, but more likely 2/3, it's the multiplier effect, but this time in reverse.  We benefited the other way on the way up, so we have to take our medicine on the way down.  The only salvation could arise if we were to produce something that people outside our economy were willing to pay for, with our current cost base that's not going to happen.  We are just going to have to sit it out until equilibrium is reached on our cost base again.  The truth is folks we are all paid way too much, not that we're any richer than the rest of europe for it, since the additional wages we have only serve to service the larger mortgages we have.
As for the 'talking ourselves into recession' quote, no so more than when we talked ourselves in a property bubble in the first place.

I just dont think we are that far down the line just yet!
We 'bought' ourselves into the 'property bubble' - and that money was spent holds more sway with me than people offering subjective opinion (like I am doing) that has been the case the last few times we were 'in a recession'.

It certainly isnt looking good for us alright. I would like to think we can hold out, but if we endure further large scale body blows (euro rates, interest rates, being forced to raise the corporation tax etc ) then we are screwed.

Until then or until all our immigrants leave (and therefore stop paying rent on houses, plus stop purchasing good in the local economy) we should remain viable.

Long term, our companies need to streamline themselves and rationalise themselves to become more efficient, as the lazy money wasting ways of Irish companies and industry is hard to credit.
We can do a lot more to help ourselves if company chiefs start to see the woods from the trees.
Such a streamlining and efficiency makeover would prolong the financial safety here.
imo.

if our economy 'bubble' mimics our 'property bubble' I will be quite happy.
The property has gone down maybe 25-30% ?
but thats still three times (at least) of what all property was worth at the outset.

I dont think people will be too unhappy if they realise that they may no longer be living on easy street and now are having to graft for lesser pay - esp when they realise that they were prev unemployed or working for fillipino level wages in the 80's!


think people will realise this eventually.

[bennydorano]

Noticed on the RTE news last night they kept saying about how public spending would have to be slashed?  What's the story there, in the UK increased public spending has always been used in the fight against recession?

[ludermor]

if our economy 'bubble' mimics our 'property bubble' I will be quite happy.
The property has gone down maybe 25-30% ?
but thats still three times (at least) of what all property was worth at the outset.

I dont think people will be too unhappy if they realise that they may no longer be living on easy street and now are having to graft for lesser pay - esp when they realise that they were prev unemployed or working for fillipino level wages in the 80's!

While there is no doubt that property has been overvalued it is still worth a lot more than people realise. While labour costs goes up and down material costs dont reduce nearly as much , especially materials controlled internationally ( steel being a big one) Builder providers were making big margin but there is only so much they can knock off for it to have an effect on the cost of a house (certainly no more than 20% id imagine) . The cost of steel  has increased by  100% in the last 2 months alone and it is still rising.

[Tankie]

This recession that keeps being talked aboput only appears to be with the building sector, can the callops of the building sector really be called a recession and most of the rest of us work for Multi Nationals and and can see how unemployment in the building section will really effect us. I think this is being by alot of people into the doom and gloom its not, yes jobs will be lost in the building and service sector but calling it a recession is a bit much I think. Builders and Tradesmen were being overpaid for years so it was always gonna come crashing down when they finally just got to rediculous!

[ludermor]

Tankie,
Some people were overpaid ( my biggest gripe would have been shuttering carp) but wages have levelled off over the past 2 years. You only hear of the weeks the weeks where lads got great money, but they never tell you of the weeks they were rained off and got f**k all. Union Blocklayers are still very well paid but they account for a tiny minority of the total brickies in the country and again non union wages have collapsed.
I dont have figures but construction was the largest employement area over the past few years so if it is suffering then the country will suffer. There are loads of job cuts in estate agent, providers, management comp etc. And they all have knock on effects.

[Tankie]

Tankie,
Some people were overpaid ( my biggest gripe would have been shuttering carp) but wages have levelled off over the past 2 years. You only hear of the weeks the weeks where lads got great money, but they never tell you of the weeks they were rained off and got f**k all. Union Blocklayers are still very well paid but they account for a tiny minority of the total brickies in the country and again non union wages have collapsed.
I dont have figures but construction was the largest employement area over the past few years so if it is suffering then the country will suffer. There are loads of job cuts in estate agent, providers, management comp etc. And they all have knock on effects.

13% of the jobs were in construction if i remeber correctly so yes jobs will be lost there and then the knockon effects will hit the service industry i.e. estate agent etc but alot of this will be counteracted by emergration of economic migrants but even at that I do agree that it will effect the country but I this a recession is a whole different ball game as the rest of the economy should function ok and we can rid out this storm.

[ludermor]

Hopefully Tankie but i aint as optimstic