The Recession

[Lone Shark]

The US were living beyond their means, they are living beyond their means and they have no intention of doing anything but living beyond their means in the future. The big difference in this instance however is that the world is beginning to realise what's going on and that they are, in the words of one of their own, all hat and no cattle.

An economy cannot tradertheir way out of decades of deficits without having something unique to offer the world and with India and China churning out graduates like there's no tomorrow, the US "brains" advantage is being eroded away. Obviously there will always be something that an MIT graduate can offer you that an english speaking degree holder from the University of Chennai cannot, but that's not enough to compensate for how the US economy has gotten used to using 20 million barrels of oil a day and only producing 6 million themselves - and even at that rate they will be dry in twelve years time.

Your solution seems to imply that once Obama/McCain start spouting rhetoric, the world will buy it and duly keep propping up the dollar - I would very much question that in the current environment. I think America has blown it's trust somewhat and will need to show it's hand a bit more than that. in order to salvage the dollar they will have to take some very hard, prgmatic decisions, decisions which Obama will not take due to being a Democrat and decisions that McCain would find difficult to implement due to the weak Republican position in the houses of Congress and the Senate.

By the way you still don't say why it would come quicker if Obama got in - the markets always want the right winger to win - why do you think this election would be any different?

Also, while you do explain why banks keeping the flow of credit to Irish businesses would be good for the general economy, you don't say why it would be good for the banks themselves, or indeed how they should get their hands on the reserves required to do so. And don't just say the knock on effect for all of us boosts the banks - that's not nearly enough to compensate for bad debts in the vicinity of 5% or more. The fact remains that Irish banks are private entities and it is naive to expect them to act altruisticly.

As for the stock market stuff, well all I can say is that while the Irish market is rife with insider trading and I wouldn't touch it with a barge pole, in any other proper economy a bank with a dividend yield of 10% would be inundated with demand. There is a lot of discounting going on for some reason, and in this country, somebody knows something.

[The Iceman]

Simple maths - spending > earnings = in the shit
What you borrow + interest > what you can afford to pay back = in deeper shit

I think there is awful pressure on people at home (armagh) to have everything and keep up with the Whites (there are no Jones in Armagh).
How many young couples have a big house and are mortgaged to their ears and still go out drinking all weekend, sunday lunch in the Canal court, two good cars and at least one holiday a year? Can they all afford it? No.

If you are living beyond your means it simply adds to the pre-recession the country is already in.  Avoid recession and stop being foolish with your money and lifestyle.

[blast05]

Loneshark, as usual very reasoned points being made but you're stating opinions based on inaccurate 'facts'.
The US GDP is not as bad as you seem to make out:

The reality is as per below   ... and only 25% of this debt is owned by countries/institutions other than the US
Year .....  US Public Debt in billions  .....  % of GDP
1940 43.0 44.2
1950 257.4 80.2
1960 290.2 45.7
1970 389.2 28.0
1980 930.2 26.1
1990 3233 42.0
2000 5674 35.1
2005 7933 37.4
2007 9008 36.8
2008  37.9(est)
[/table]


Plus when you go on with a line that the euro will be worth 3 dollars, at least give us some reasons why rather than saying perpare to be astonsihed.

[lynchbhoy]

A change in US gov will bring out the positive thinking people, nothing more nothing less.
It may be a 'emporers new clothes' type scenario - but confidence and consumer/industry confidence counts for a hell of a
lot in the marketplace.
the democrats are attributed to be the money bringers from the successful clinton years, so the marketplace will be
more receptive to a change of gov than a 'continuation' of one.
thats about it really. No mathematical or financial reasons. Faith and confidence. IMO that means a lot.
As mad as it sounds.

With Banks not doing much meaningful business, then they will choke themselves to death (the bad debt rate could even
be as high as 7% - but I believe it was 4 or 5% this past number of years anyway!). Failing to do business out of
fear is as bad as losing most on bad debts etc. The result will cripple the banks. As they are proven to be heavily
profit making businesses in the past 15 years, and they should continue to reap the rewards of mortgage repayments from
millions of customers while offering equal or lesser interest rate deposit accounts, then that still indicates large scale financial income.
Unless of course the whole thing goes down the toilet and everyone fails to repay mortgages.
Banks are starting to offer better interest rates to increase investment revenue and lock in th emoney for longe terms.

You mentioned the stock market and how you judged an Irish business to be fecked by its falling share price.
I was simply indicating that this did not actually mean the business was failing, but how daft the stock market can be and how it
frequently distorts the reality of a firms profitability or financial/business status.

Obama and mccain can spout rhetoric, but with countries like china and middle east tripping over themselves to do business and to
be seen to do business with the western world (no sorry actualy only the USA really), then I can see a ready market for
pretty anything the US can ship to China, or another big revenue generator - exploiting chinas resourses and taking them
for half nothing in imports before selling on at a big profit (as China still lacks the expertise and manpower to unlock their
natural and manufacturing resources/potential).

Again all IMO.
Ireland will continue to keep afloat, as it is in our interests to do so and people will knuckle down and continue
to work, trade and spend (sensibly) their way through this.
I was in two diff shopping centres today (Blanch and Navan) - the amount of people out spending and so on for a Monday when a so called
'recession' is about to hit was amazing imo - maybe no one told them!.

We have v diff views of the way the us economy could go. Maybe we should be 'economists' and earn a fortune for talking such subjective sh*te ! !   

[Lone Shark]

Loneshark, as usual very reasoned points being made but you're stating opinions based on inaccurate 'facts'.
The US GDP is not as bad as you seem to make out:

The reality is as per below   ... and only 25% of this debt is owned by countries/institutions other than the US
Year .....  US Public Debt in billions  .....  % of GDP
1940 43.0 44.2
1950 257.4 80.2
1960 290.2 45.7
1970 389.2 28.0
1980 930.2 26.1
1990 3233 42.0
2000 5674 35.1
2005 7933 37.4
2007 9008 36.8
2008  37.9(est)
[/table]


Plus when you go on with a line that the euro will be worth 3 dollars, at least give us some reasons why rather than saying perpare to be astonsihed.

All of those numbers are predicated on the one notion - that oil will continue to be traded in dollars. Americans don't pay down debt, they never do - they inflate it away. However when oil is traded in dollars that sustains their currency and spreads the inflation all across the globe. However when the lads in places like Iran, Nigeria, Venezuela and Russia all start to say to the Yanks that they're money is not so good any more, that's when it'll all hit the fan - and suddenly inflating away the deficit will be less of an option becuase the people of Chicago, Miami and Iowa will suffer rather than those in all the other oil consuming countries.

Additionally, the US are consuming their own oil reserves at a massive rate - a very unsustainable rate.

My reason - the US dollar will stop being the currency that is used for which to value oil, and suddenly the whole house of cards will collapse from there.

[Lone Shark]

A change in US gov will bring out the positive thinking people, nothing more nothing less.
It may be a 'emporers new clothes' type scenario - but confidence and consumer/industry confidence counts for a hell of a
lot in the marketplace.
the democrats are attributed to be the money bringers from the successful clinton years, so the marketplace will be
more receptive to a change of gov than a 'continuation' of one.
thats about it really. No mathematical or financial reasons. Faith and confidence. IMO that means a lot.
As mad as it sounds.

We'll agree to disagree on that one. I think the markets will always bounce on the strength of small changes in sentiment, but the underlying value will always be reasonably well reflected. You could put out all the rumours you like about a company like Coca Cola or Tesco, they just ain't going anywhere because they'll just keep on keeping on. The US needs to prove that it's going to change it's ways befoe the market will buy into it IMO.

With Banks not doing much meaningful business, then they will choke themselves to death (the bad debt rate could even
be as high as 7% - but I believe it was 4 or 5% this past number of years anyway!). Failing to do business out of
fear is as bad as losing most on bad debts etc. The result will cripple the banks. As they are proven to be heavily
profit making businesses in the past 15 years, and they should continue to reap the rewards of mortgage repayments from
millions of customers while offering equal or lesser interest rate deposit accounts, then that still indicates large scale financial income.
Unless of course the whole thing goes down the toilet and everyone fails to repay mortgages.
Banks are starting to offer better interest rates to increase investment revenue and lock in th emoney for longe terms.

The banks have locked away a lot of profit, so if they have a few lean years that won't be a problem - a few years with heavy defaults however is another matter entirely. However you have your percentages way off - if Bank of Ireland had 7% bad debts next year that would represent some €9 billion, or the profits from the last decade or so all wiped off in one year. We then end up in "run on the bank" country, which would turn the economy into a basket case altogether. I cannot disagree with you strongly enough on this - making dubious loan calls is not the way forward.

You mentioned the stock market and how you judged an Irish business to be fecked by its falling share price.
I was simply indicating that this did not actually mean the business was failing, but how daft the stock market can be and how it
frequently distorts the reality of a firms profitability or financial/business status.

I never said I judged a business by it's share price. Warren Buffett doesn't, and he's the best investor in the world - I'm hardly going to disagree with him. HOWEVER - we live in the greatest gombeen kleptocracy in the history of the world, with sleeveen non-nod-wink-wink tactics at every turn and a truly ugly desire to get rich quick and hang the consequences. The greatest concentration of this ugly side of our nature is to be found trading the ISEQ. Last week there was a sudden splurge in selling of Greencore shares. The following day Greencore announces the minor matter of €20 million needing to be wiped off it's balance sheet. The ISEQ is full to the brim with cheats, thieves and short cut merchants and when they go out of their way to express to the world how Irish banks are undervalued and how they must be a massive buy while at the same time shorting the bollix out of them themselves, then I just can't bring myself to ignore the overwhelming stench of something dead in the yard that just wasn't buried deep enough.

Obama and mccain can spout rhetoric, but with countries like china and middle east tripping over themselves to do business and to
be seen to do business with the western world (no sorry actualy only the USA really), then I can see a ready market for
pretty anything the US can ship to China, or another big revenue generator - exploiting chinas resourses and taking them
for half nothing in imports before selling on at a big profit (as China still lacks the expertise and manpower to unlock their
natural and manufacturing resources/potential).

China and the middle east are queuing up to sell stuff to the yanks and then buy half of Wall street with the proceeds - they most certainly aren't queuing up to buy American Cars, American clothes or American anything. None of that is going to clear America's obscene trade gap.

Again all IMO.
Ireland will continue to keep afloat, as it is in our interests to do so and people will knuckle down and continue
to work, trade and spend (sensibly) their way through this.
I was in two diff shopping centres today (Blanch and Navan) - the amount of people out spending and so on for a Monday when a so called
'recession' is about to hit was amazing imo - maybe no one told them!.

We have v diff views of the way the us economy could go. Maybe we should be 'economists' and earn a fortune for talking such subjective sh*te ! !   

I sincerely hope that you're right. I do wonder by times if the work ethic in this country has been eroded away just a little too much - too many people have got welathy/debty taking shortcuts in recent years, and while the SUV they bought is still bright and shiny and sitting in the yard for all the neighbours to see, nobody sees the big loan, the huge credit card bill and the massive mortgage on the house that was worth €50k more a month ago. What's the phrase - nothing clouds a man's judgement like his neighbour getting rich. Above all, we still keep voting FF back in - that hardly says a lot for our will to change our ways and make a good honest living. Still, I'd love if you were right on this one.

As for the economists thing, you'd be fine, banks would be tripping over themselves to hire a positive guy like you. Guys like me who don't like skipping over the bad news however might not find it as easy to get a handy job working for Mammon though....

[muppet]

All of those numbers are predicated on the one notion - that oil will continue to be traded in dollars. Americans don't pay down debt, they never do - they inflate it away. However when oil is traded in dollars that sustains their currency and spreads the inflation all across the globe. However when the lads in places like Iran, Nigeria, Venezuela and Russia all start to say to the Yanks that they're money is not so good any more, that's when it'll all hit the fan - and suddenly inflating away the deficit will be less of an option becuase the people of Chicago, Miami and Iowa will suffer rather than those in all the other oil consuming countries.

The first oil producer to switch was a certain Saddam. The next is Iran who are doing some proxy trading already (I'm not a banker so am unable to explain fully) so expect another war, especially if McCain gets in (depite what he preaches he is a Republican and it is decades since a Republican president didnt fight a war). Israel and Columbia are available to fight proxy wars if necessary and are already geared up to do so.

Now of course we know the real reason why Britain didnt join the Euro. They werent allowed by the US (so much for the jingoistic bravado about sterling) just as the EU's only other oil producer Sweden wasnt allowed.

LoneShark says prepare to be astonished. I agree. This thread has been about the world economy but I see major new conflicts as been the most significant outcome.

[lynchbhoy]

The banks have locked away a lot of profit, so if they have a few lean years that won't be a problem - a few years with heavy defaults however is another matter entirely. However you have your percentages way off - if Bank of Ireland had 7% bad debts next year that would represent some €9 billion, or the profits from the last decade or so all wiped off in one year. We then end up in "run on the bank" country, which would turn the economy into a basket case altogether. I cannot disagree with you strongly enough on this - making dubious loan calls is not the way forward.

I dont mean taking on risky new business, I mean continuity of performing the same business for the same companies as previous years, same risk then so the precedent should mean they do business with them now.


You certainly have a bee in your bonnet about insider dealing !

Were you stung prev ?

Its gonna be interesting to see how the US can intelligently manouvre themselves out of this. Confidence is the first step and crucial, but as you mention, it needs to be backed up soon after this by some nifty financial strategic action. If it was us in that position, we would be fcuked.
I think the US has more options, resources and friends (countries that will need future favours or who are afraid of the US) so they 'have' the potential to get out of this. we'd be fcuked (I think I said that already).


Domestically I hope I am right too, though it was much the same in previous 'recession' times , there are just other external worldwide difficulties that are parallel and could more us into a more precarious position. As long as the circle remains unbroken here, the mounting debt will hopefully not manifest itself to be a problem (cars will get paid off, houses mortgages get paid - maybe duration terms increased). But I agree and think the consumer needs to wake up and stop competing with their neighbours.A lot of folk have seen this so far and more will v soon. Nothing more resourceful than people when facing difficulty.
As long as that circle remains intact I think we can pull through and if never hitting the heights again, we can certainly remain a decent standard of living in the country (in comparison to pre mid 80's).

[Lone Shark]

The banks have locked away a lot of profit, so if they have a few lean years that won't be a problem - a few years with heavy defaults however is another matter entirely. However you have your percentages way off - if Bank of Ireland had 7% bad debts next year that would represent some €9 billion, or the profits from the last decade or so all wiped off in one year. We then end up in "run on the bank" country, which would turn the economy into a basket case altogether. I cannot disagree with you strongly enough on this - making dubious loan calls is not the way forward.

I dont mean taking on risky new business, I mean continuity of performing the same business for the same companies as previous years, same risk then so the precedent should mean they do business with them now.

But sure the changing nature of the economy means that loans that had minimal risk before have much more risk now - is that not obvious?

You certainly have a bee in your bonnet about insider dealing !

Were you stung prev ?

Nope, I never had enough money to get stung. I had a few options on BOI shares with a mate and my innate sense of distrust about what was going on in this country saved me as I sold them up some eighteen months ago. I have a couple of small pension funds that have been basically made worthless by the cosy cartel that exists between pension funds and the ISEQ, but all in all I'd say I've got away very light in comparision.

My point is that it's shennanigans like this that means that the one source of money out there that could alleviate the credit crunch in Ireland - sovereign wealth funds, middle east investors etc. - now avoid us like the plague because we are perceived worldwide to have the stock market made up entirely out of cast members from Oliver Twist. This is not me speculating, this has been featured in both money week and the Economist and I will dig up the links if I get around to it today. These particular chickens coming home to roost are hugely costly for anyone with an Irish pension, and they are yet another legacy of our attitude of "ara shur he only took a small few bob" attitude to Bartholemew Ahern.

Domestically I hope I am right too, though it was much the same in previous 'recession' times , there are just other external worldwide difficulties that are parallel and could more us into a more precarious position. As long as the circle remains unbroken here, the mounting debt will hopefully not manifest itself to be a problem (cars will get paid off, houses mortgages get paid - maybe duration terms increased). But I agree and think the consumer needs to wake up and stop competing with their neighbours.A lot of folk have seen this so far and more will v soon. Nothing more resourceful than people when facing difficulty.
As long as that circle remains intact I think we can pull through and if never hitting the heights again, we can certainly remain a decent standard of living in the country (in comparison to pre mid 80's).

I really hope you're right. The big danger is that people have to accept that living standards have to drop a little. I was listening to Matt Cooper last week when a guy from ICTU (not sure if it was Begg) and Moore McDowell were on, and when they were referring to inflation, the Union guy was insistent that the government floor has to be rises in line with inflation with a bit extra - how "it is inconceivable that we should allow living standards to drop". Now I'm sure the first bit was just your standard pre negotiation posturing, but he seemed genuinely horrified when McDowell suggested that a recession is just that - living standards dropping. Basically either they drop a little for everyone, or else they stay the same for some and drop a hell of a lot for the others who lose their jobs. The union guy was flabergasted at this notion.

Now again, perhaps that was all a strategic negotiating position - but the truth is that standards have to drop, and with the lives that we've left behind, I really wonder if people are prepared for that. I think there's a danger of people getting in way too deep before they realise that they are in well over their heads, and only taking the necessary remedial action when it's way too late.

[lynchbhoy]

I'd agree that some of these loans might be riskier to businesses, but there would be a good 55-60% imo that shoul dnot be. Depends on the business and industry, but the Banks are being lazy assessing these and while that might be their perogative (though the Gov doesnt agree) it certainly is detrimental to our economy and yes the banks too - while they have great profits racked up, if there is no one out there to trade with in the aftermath, they will also have to cease trading and the top few shareholders will be the only winners here!

I have no time for stock market and share dealing myself (worked in a stockbrokers for a while too!) - am very cynical of this whole industry/practice.
I have even less time for unions. Talk about insider dealing and insular looking after their own interests! I'd hark back to 1987 and the builders strike for my first sour taste of them then.

People are in the same situation as the houses. They started out at half nothing, got increased worth of 400-500% and are now going to have to live with a re-adjustment in value of about 300-350%.
It might be almost half /two thirds as before, but its still three times what we started off with and from.
If people can cast their memories back a wee bit they will realise this and I think most people are.
If no yet, they soon will. The one good thing about the current 'downturn/recession/sky falling down' is that it is waking people up to spend more thriftly.
When you have a missus from Cavan, you always are in this mindset!

[Smokin Joe]

People are in the same situation as the houses. They started out at half nothing, got increased worth of 400-500% and are now going to have to live with a re-adjustment in value of about 300-350%.
It might be almost half /two thirds as before, but its still three times what we started off with and from.
If people can cast their memories back a wee bit they will realise this and I think most people are.
If no yet, they soon will. The one good thing about the current 'downturn/recession/sky falling down' is that it is waking people up to spend more thriftly.

Lynhcboy, the problem with what you have said is that for most young couples they have bought a house at obscene money in the last few years.  That means that they can't just tighten their belts because so much of their income goes to paying the mortgage.
I would therefore contend that such people WILL NOT be able to make do with earning 2/3rds of what they were before, as they'll not be able to afford the house.
If this happened you would have huge numbers of keys being handed back to the banks, and then were would the price of property go?

I think that a lot of people are in big trouble at the moment.  Young people aren't accustomed to saving.  When your mother needed a washing machine she saved for it and then bought it, our generation buy it, stick it on the credit card and worrying about paying it back some other day.

What I am saying is that our generation (mid 30s or less) have only known times of great wealth and it will take a serious change in mindset for them to be able to live within their means from now on.

[lynchbhoy]

Lynhcboy, the problem with what you have said is that for most young couples they have bought a house at obscene money in the last few years.  That means that they can't just tighten their belts because so much of their income goes to paying the mortgage.
I would therefore contend that such people WILL NOT be able to make do with earning 2/3rds of what they were before, as they'll not be able to afford the house.
If this happened you would have huge numbers of keys being handed back to the banks, and then were would the price of property go?

I think that a lot of people are in big trouble at the moment.  Young people aren't accustomed to saving.  When your mother needed a washing machine she saved for it and then bought it, our generation buy it, stick it on the credit card and worrying about paying it back some other day.

What I am saying is that our generation (mid 30s or less) have only known times of great wealth and it will take a serious change in mindset for them to be able to live within their means from now on.

I think the near miss of almost losing their houses would be a big enough wake up call for most.
I'd also like to see a japan-esque style mortgage scenario brought in to bail out such folks as you indicate above.
That is increase the mortgage loan period to beyond the 30 and 35 year period. Allow mortgages to be handed down from one generation to the next.
It worked in japan, and they have gone from being completely fcuked a decade ago to being on the brink of a Tokyo- tiger boom economy now.
Japan is about to rocket back into the world economy in a big way. That is a model we should also look to use here.
Also we are nowhere near as badly off as tey were then. You think our folks are bad for spending dosh (that they dont really have) ...the poor Japanese went ballistic and spent the country dry!
imo there is enough hope and precedents if our Gov and people can open their eyes and get rid of this hean in the sane doomsday approach.
It needs the common sense that yourself and others mention, not everyone has that, so they are prob fcuked, the rest are hopefully going to be ok.
Everyones a winner here (relatively). People keep their houses (ok they end up spending more, but its better than losing them).
Banks make more, and banks also have lesser risk of forclosure!
The hit to the economy is reversed by this. However this is a new departure for the Irish lending mindset, so dont know it the banks or people would want this. I think it could be a lifesaver for many.

[bcarrier]

UK housebuilders are feeling pinch now.

Turnover is vanity. Profit is sanity. Cashflow is king.

This is from fool.co.uk.


The house-builders are being demolished by the market today after one of the biggest, Taylor Wimpey (LSE: TW), revealed that it hadn't been able to raise new capital.

As I write, Taylor Wimpey's shares have tumbled by more than 50% today to 26p. A year ago they were trading at 377p!

So where does that leave Britain's builders who are being deconstructed in sympathy? Are there any gems among the rubble?

Let's have a quick glance at a few. I'm comparing the current market caps of the companies with their net asset values 'NAV' (net asset value; the sum of all a company's assets less all its liabilities). The restated NAV has been calculated by me after applying a severe 35% discount to the value of the company's inventory to reflect the current harsh market conditions.

Company                              Mkt            NAV 
                                              Cap                                                                             




Bellway (LSE: BWY)
   £ 418m
    £501m

Bovis (LSE: BVS)
   £ 351m
    £420m

Redrow (LSE: RDW)
   £ 160m
    £231m

Persimmon (LSE: PSN)
   £ 717m
    £1159m

Barratt (LSE: BDEV)
   £ 143.8m
    £1099m

Berkeley (LSE: BKG)
   £ 726m
    £250m

Taylor Wimpey (LSE: TW)
   £ 303m
    £1600m




Of course, these are very rough and ready figures, which take no account of countless other highly relevant factors affecting valuation, and none whatsoever of profitability -- and prices are constantly changing. But they do give one indication of overall value.

However, in the current climate 'survivability' has become an issue. Companies go bust because they have insufficient cash to repay debts and Taylor Wimpey has spooked the market today by saying it could breach its banking covenants. So it's vital to pay close attention to cash-flow in the current climate where new finance is exceptionally hard to come across, almost regardless of net asset values it seems.

Nevertheless, some of these valuations could look ludicrous in a few years' time, but which won't be included in the line-up by then? It's all about timing your entry when trying to catch a falling knife.

Not all builders are the same. Personally, I quite like a situation where a price has been knocked severely purely in sympathy with a "colleague" and on this basis, Bellway, Bovis, Redrow, Persimmon and Barratt look worthy of closer inspection – but only by brave investors prepared to lose their shirts. Of these, Bovis looks the best to me on a safety-first basis. Bovis has seen off previous housing slumps, though it may now be regretting its purchase of Elite Homes, and a site near Bristol last year. Bovis said in May that it has access to loan facilities of £220m which don't mature until 2010. This may be crucial as now is clearly not the time to go looking for new funds.

For those of us who enjoy the thrill of a gamble with money we can afford to lose, the builders will certainly offer some excitement over the months ahead

[Bogball XV]

THE Department of Finance is bracing itself for up to 10,000 job losses in the construction sector at the end of the month.

An anticipated 'Black Friday' before the traditional builders' holiday later this month could see the largest number ever thrown onto the dole in a single day.

Construction employment has dropped by 2.5pc, or 7,000 jobs, in the last year. But industry sources say the vast majority of firms held onto staff in 2007 in anticipation of a pick-up in demand in 2008 that never materialised.

Faced with zero demand for new houses, tightening bank credit and increased interest rates, many within the sector are privately predicting a major shedding of staff.

Many due to go on holidays will be told not to report back afterwards, with cash-strapped firms already pressing for greater casualisation of their industry.

"I don't know whether it will be 5,000 or 10,000," said Tom Parlon, the director general of the Construction Industry Federation, who said he remained optimistic about the situation overall. The biggest concern of his members was to hold onto their core workforces, he said.

"It is difficult. The advice is to cut overheads, and that means jobs."

The CIF is already pressing at the national pay talks for a reduction in the hourly pay of unskilled staff that would facilitate the slimming of core employment by major builders.

There are now 275,000 working in construction compared with 282,000 a year ago, but levels of business suggest a fall to about 250,000 would be more in tune with market conditions.

A large-scale redundancy wave at the end of this month would not show up in official statistics until September, since the live register is compiled a month in arrears. But it would hit the Exchequer hard in terms of lost taxes and increased social welfare outlay.

"Obviously, the holidays is an issue that comes around every year," Mr Parlon, the former PD minister of state, declared. "But in general, firms will only lay people off if the particular job is finished.

"The big contractors all have substantial work in hand."

But he admitted the pinch was being felt among smaller firms, particularly house builders, who were facing difficulties in getting working capital. "There are turnover and cash-flow difficulties," he said.

Measures

Mr Parlon also conceded that employers were worried about losing key staff through expertise being drawn abroad in a brain drain. The CIF is pressing for the Government to intervene through such measures as a National School building programme.

The CIF is currently attempting to overthrow the Registered Employment Agreement (REA), which provides for a rate of €14.88 per hour for unskilled workers on building sites.

The big building firms say this equates to €35,000 a year, more than a newly qualified garda's starting salary, or that of a young civil service solicitor.

The federation is seeking an hourly rate of just €10.80, a reduction of €4 an hour, saying this would amount to 60pc of the skilled rate -- whereas the current stipend is 80pc of the latter.

- Senan Molony Deputy Political Editor

What I can't understand about this is why analysts think that employment can be maintained at 250K down from 282K, I mean, where do they get that??  Presuming activity is cut on a par with activity in the housing market (I know there's a pile of new launches that are being finished regardless, but presumably there won't be many more), would job losses not have to be in the hundreds of thousands?
I do know that up in Derry, activity has more or less ceased, there's an unbelievable amount of people not working, far worse than I ever remember, but then most people I know were in construction - they were normally signing on too

[mannix]

Bogball,
the government are giving it to us with jam on it, I hear of a lot of lads in mayo doing damn  all, i have a job that needs doing for a while now, decided again to see if I could get a quotation, well they not only gave very reasonable quotes in record time but they are calling me every day to see when will they start.